On Wednesday, nvidia (NVDA.O) predicted that its revenue growth would slow down for seven consecutive quarters, as this ai chip manufacturer failed to meet the high expectations of some investors who have made it the most valuable company in the global market.

After the earnings report was released, the stock price fell by 5%, but quickly narrowed losses, dropping 2.5% in after-hours trading. During regular trading hours, the stock price decreased by 0.8%. The stock price fell 1.9% in early trading on Thursday in Frankfurt.

Before the earnings report was released, market expectations for nvidia were very high, with the stock price rising over 20% in the past two months and reaching an intraday all-time high on Monday. So far this year, nvidia's stock price has nearly quadrupled, increasing more than nine times over the past two years, with a market cap reaching 3.6 trillion dollars.

Nvidia is launching its powerful Blackwell series of ai chips, although these chips will initially impact the company's gross margin, but over time, the gross margin will improve.

"The new series of processors have been accepted by nvidia's customers, and the company expects to exceed initial sales targets in the fourth quarter, anticipating sales in the billions of dollars," said nvidia's chief financial officer Colette Kress during a conference call with analysts on Wednesday.

When asked about media reports of overheating problems with the flagship liquid-cooled server during initial testing, CEO Jensen Huang said, "There are no issues; customers like microsoft (MSFT.O), oracle (ORCL.N), and CoreWeave are implementing these systems."

"Our Grace Blackwell liquid-cooled system has no issues," Huang stated. "The engineering isn't easy, as what we're doing is difficult, but we're doing very well."

Initially, the gross margin of the Blackwell series chips will be around 70%, but as production gradually expands, the gross margin will increase to about 75% in the medium term, said Kress.

The company forecasts fourth quarter revenue to be $37.5 billion, with a fluctuation of 2%, compared to analysts' average expectation of $37.09 billion, according to data compiled by LSEG.

Despite benefiting from huge demand for the company's chips, which form the brain of complex generative ai systems and show astounding growth rates, there has also been a slowdown compared to previous quarters, where nvidia's sales typically doubled at least.

Nvidia's fourth quarter forecast indicates that the company's revenue growth will slow to about 69.5%, down from 94% in the third quarter.

"Investors have become accustomed to this company's performance exceeding expectations, but it is becoming increasingly difficult to achieve this," said Ryan Detrick, chief market strategist at Carson Group. "It is still a very solid report, but the fact is that when targets are set so high, things become more challenging."

However, the slowdown in revenue growth masks the huge demand for the company's ai chips, which dominate the market.

Supply chain issues have made it difficult for nvidia to report the significant earnings that helped it become a Wall Street darling. But IDC analyst Brandon Hoff stated that if the company's gross margin exceeds 75%, growth could accelerate again.

A bottleneck in the company's chip supply is the limited capacity of its manufacturing partner, taiwan semiconductor, in advanced manufacturing technology.

Jensen Huang refused to comment on specific production issues at taiwan semiconductor, but he also stated, "As we gradually expand production of Blackwell, we will continue to add more production lines, improve our yield rate, and enhance the production cycle. All of this will increase our output."

Yield rate refers to the number of effective chips on each wafer. The company stated that by changing the blueprints that taiwan semiconductor uses to manufacture Blackwell chips, it has resolved the design flaws of these chips.