Don’t let Wall Street irrationality drive technology decisions

Tech giant and AI innovator NVIDIA released its earnings on Wednesday, August 28, 2024, beating its own forecasts and Wall Street estimates.

However, the company’s share price fell by about 3% the next day. To be clear, NVIDIA’s earnings went from $13.5 billion to $30 billion year over year. That is an increase of about 122%. Still, Wall Street chastised NVIDIA—not for the obviously insane level of success the company is enjoying, but because the growth wasn’t as huge as they had hoped.

Wall Street shocks

Wall Street wanted to be shocked by how good NVIDIA’s earnings were. Frankly, it’s hard not to picture Wall Street as a financial Donner party deciding to eat each other before they run out of rations.

This has led to experts worrying that the “AI Bubble is bursting” and gloom and doom everywhere. Signs of rationality have begun to return, especially outside the Wall Street groupthink. But it begs the question – how much should enterprise buyers bet on this cycle of increasingly pessimistic news events surrounding AI companies?

The answer is little to none. All enterprise buyers need to know is that AI is a hot topic – so the news cycle will blow any reaction to AI that isn’t 100% positive out of proportion. NVIDIA is not a startup, and being disappointed by a 122% increase to $30 billion is completely irrational. NVIDIA’s financial health is fantastic – and frankly, for enterprise buyers, that’s all they need to consider when referring to the numbers NVIDIA is generating.

AI rationality

Additionally, AI is in the middle of a bubble, a hype cycle where it’s all anyone can talk about. For the enterprise buyer, this means due diligence – don’t invest in AI and AI technologies without a good use case – one that saves money/time or makes money. It’s reasonable to look at the AI ​​frenzy and worry that things are moving too fast, but this happens all the time in technology.

Rational caution and resistance to the unhealthy urges created by FOMO (fear of missing out) is the order of the day. Stock prices fluctuate, and financial experts often turn to areas in which they have no experience, such as evaluating the potential of new technologies.

Enterprise technology decisions are meant to be multi-year and strategically executed. Don’t let the tactical perspectives of the stock market and financial experts derail good technology strategy.

“Don’t Let Wall Street Irrationality Drive Technology Decisions” was created and originally published by Verdict, a brand owned by GlobalData.

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