AI and Big Data Cryptos Take a Tumble as Nvidia’s Q2 Earnings Fail to Satisfy Higher Expectations

Major artificial intelligence and big data related cryptocurrencies took a significant hit following the release of Nvidia’s second-quarter 2024 earnings report, which, despite surpassing expectations, failed to impress investors.

The Artificial Superintelligence Alliance (FET) saw its value plunge by 7.8%, dropping to $1.16 just hours after Nvidia’s earnings were announced. Similarly, Bittensor (TAO) experienced a 4.5% decline, falling to $295.22, while Render (RNDR) dropped 6.8% to $5.47, according to data from CoinMarketCap.

Nvidia, a key player in the AI space, reported a $30 billion revenue for Q2 2024, marking a 15% increase from the previous quarter and beating previous estimates by approximately $1.32 billion. However, despite these robust figures, investor sentiment was lukewarm, which is not what you would expect with such great numbers.

It seems as though better than expected numbers just doesn’t fit the bill as investors put Nvidia in a class of it’s own and investors expect this company to blow away expectations and not just beat them by 15%. For any other company this would be a massive win but the bar is set so ridiculously high for Nvidia that investors may have to take a reality pill and reduce their expectations in the future.

The underwhelming reaction came as a surprise, particularly after analysts had predicted Nvidia would outpace Wall Street estimates by at least 10%. Following the earnings release, Nvidia’s stock closed at $125.61 on August 28 and then fell an additional 6.89% in after-hours trading, landing at $116.95.

The ripple effect was felt across the AI and big data focused cryptocurrency sector, which had experienced a similar downturn after Nvidia’s Q1 earnings release in May, despite an 18% revenue increase from Q4 2023. This pattern suggests a cautious approach from crypto investors who may be tethered to Nvidia’s performance as a bellwether for AI’s broader market potential.

“This isn’t about demand issues. The market is still there; the cloud computing providers, the hyperscalers that run data centers, are still spending on Nvidia’s products,” commented an industry analyst. “We’re still navigating the AI landscape, and computation will play a crucial role as the technology evolves.”

The recent dip in AI and big data related cryptocurrencies also follows a period of substantial growth, with the market capitalization of AI and big data crypto projects surging by nearly 80% in the three weeks after the notorious Crypto Black Monday on August 5. However, this enthusiasm seems to be waning, particularly as institutional interest in AI and big data begins to gravitate towards traditional markets, leaving crypto investors in a more precarious position.

As the AI and cryptocurrency sectors continue to intertwine, the market’s reaction to Nvidia’s earnings underscores the heightened expectations and volatility that can influence these rapidly evolving fields. For now, it appears that while Nvidia’s technological advancements remain solid, the crypto markets may need more than strong earnings and a good story to maintain their momentum as investors begin to realize the institutional limitations that are in the crypto space for them.

David Thompson
Financial Desk