Is the Brilliance of US Tech Stocks Coming to an End?

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Wall Street's tech stocks not only dominate the global market value rankings but also serve as a barometer of market sentiment. However, Nvidia's recent financial report seems to have cast a shadow of uncertainty over the future of tech stocks.

Nvidia, the tech giant second only to Apple in market capitalization, reported financial data that met expectations but fell short of the market's most optimistic forecasts, leading to a nearly 7% drop in stock price in after-hours trading.

This raises the question: Is the market's valuation of tech stocks overly optimistic? Are the performance expectations too demanding?

Nvidia's financial report shows second-quarter revenue reaching a staggering $30 billion, with a net profit of an astounding $16.599 billion and a gross margin exceeding analysts' expectations.

However, despite this, the market's response has been lukewarm. The reason behind this may be related to the company's performance guidance for the third quarter. While Nvidia expects third-quarter revenue to reach $32.5 billion, this is still below the market's highest expectations.

Generally, in the world of tech stocks, expectations can have a greater impact on stock prices than actual performance. Nvidia's stock price decline may also be related to difficulties encountered in the production process of its new Blackwell chip, affecting investor confidence and exposing the tech sector's dependence on innovation.

Furthermore, the brilliance of tech stocks is largely built on performance growth and massive stock buybacks. If these two pillars start to shake, the bullish logic of tech stocks will face challenges.

Currently, the combined market capitalization of Apple, Nvidia, and Microsoft—these three companies—almost equals the entire market capitalization of the A-share market, and their price-to-earnings ratios are at historical highs. Does this suggest that tech stocks are overvalued and market risks are accumulating?

With market volatility increasing and the future of tech stocks filled with uncertainty, Nvidia's financial report performance may signal the end of the tech stock boom cycle or just a temporary fluctuation.

At this critical moment, investors should pay more attention to the fundamentals of companies and whether they can sustain innovation to maintain their market position.