Sensible Investing

Today, graphics chip maker Nvidia (NVDA) warned that its fourth quarter revenue will decline sequentially by nearly 50%, much worse than 6% drop expected by analysts. To call this development horrible does not do its justice. Under normal circumstances, a high-tech company that issues a warning like this will see its stock plunge.

Today, however, Nvidia’s share actually rose a few cents. Often, when a stock fails to drop in the face of bad news indicates that such news are already priced in (indeed, Nvidia’s shares are now worth about a quarter of what they were going for a year ago), and further declines are not likely. I believe this is indicative not only of Nvidia, but of many other companies in high tech sector. Intel’s warning a few days ago also had little effect on its stock.