Several major cryptocurrencies associated with artificial intelligence saw sharp declines following Nvidia’s release of its second-quarter 2024 earnings. Despite the earnings exceeding expectations, they failed to satisfy investors’ high hopes, leading to a downturn in the market.
Among the hardest hit was Artificial Superintelligence Alliance (FET), which dropped by about 7.8%, bringing its value down to $1.16 just hours after Nvidia’s earnings announcement. Bittensor (TAO) also faced a notable decline, falling 4.5% to $295.22, while Render (RNDR) experienced a 6.8% drop, settling at $5.47, as reported by CoinMarketCap.
Nvidia’s Earnings Beat Estimates but Disappoints Investors
Nvidia reported a remarkable $30 billion in revenue for Q2 2024, representing a 15% increase from the previous quarter and surpassing initial projections by roughly $1.32 billion. Despite these strong figures, investors were not impressed. Market commentator Lisa Abramowicz noted in an Aug. 28 post on X (formerly Twitter), “Better-than-expected doesn’t cut it for Nvidia. Evidently, investors expect this company to blow away expectations.”
Some market analysts had even predicted that Nvidia would surpass Wall Street’s estimates by a margin of at least 10%. Following the earnings release, Nvidia’s stock price closed the trading day on Aug. 28 at $125.61 but later fell by an additional 6.89% in after-hours trading, bringing it down to $116.95, according to Google Finance.
The Ripple Effect on AI-Related Cryptocurrencies
The performance of AI-related cryptocurrencies has historically been closely tied to Nvidia’s financial results. This pattern held true in the past, and once again, following the recent earnings release, several AI tokens suffered significant losses.
Some crypto enthusiasts had already anticipated this downturn. For instance, on Aug. 23, a user on X known as Shogun predicted the decline, advising others to consider shorting their positions after Nvidia’s earnings announcement.
Nvidia is known for producing the advanced chips that companies use to train and deploy AI models. Back in May, after Nvidia released its Q1 earnings, AI-related cryptocurrencies also experienced a downturn, despite Nvidia reporting an 18% revenue increase compared to Q4 2023.
Despite the recent setbacks, some analysts remain optimistic about Nvidia’s long-term prospects. Bloomberg’s Ed Ludlow commented on Aug. 28, “The very lofty estimates were very lofty indeed,” but he reassured that the demand for Nvidia’s products remains strong, especially among cloud computing providers and data centers.
This recent drop in AI cryptocurrencies follows a period of significant growth. After “Crypto Black Monday” on Aug. 5, which saw Bitcoin drop below $50,000, the market capitalization of AI and big data crypto projects surged by 79.7% over the next three weeks. However, around that time, the total market cap of these projects had hit a yearly low of $18.21 billion.