CNBC Daily Open: Nvidia’s investors may be barking up the wrong tree

Market watchers might be perplexed by the seemingly contradictory moves of Nvidia’s shares in extended trading.

The company beat expectations for its second-quarter results, and its forward revenue guidance also surpassed expectations. A stock buyback was also announced, but the stock fell.

The reason? Data center revenue, which serves as a proxy for the company’s AI prospects, came up short of estimates.

Nvidia’s growth in recent years has been fueled by its data center business, which focuses on graphics processors, or GPUs, and related products that link and scale them for large deployments. Revenue from the division rose 56% from a year earlier to $41.1 billion, slightly below the $41.34 billion estimate from StreetAccount.

However, it is important to note that the company is not performing poorly. In fact, the chipmaker has topped earnings estimates in 11 of the past 12 quarters, but its shares fell after results on four of those occasions, according to FactSet.

Could investors then, be expecting too much from the chipmaker?

Remember, Nvidia still has other engines to rely on, such as its gaming division. In fact, before the AI boom, Nvidia’s gaming division was its largest revenue driver, and the firm was more widely known among computer enthusiasts for its graphics cards, which they would install in their own rigs.

Trees, forests and the Nvidia logo might all be green, but investors shouldn’t miss the Nvidia forest for the AI tree.

Nvidia posts results beat. The tech giant reported better-than-expected earnings and revenue on Wednesday, and said sales growth this quarter will remain above 50%. However, the stock slipped in extended trading, as data center revenue fell short of estimates for the second straight period.

S&P notches fresh closing high. The broad market index gained 0.24% at the end of the session and reached a new closing high of 6,481.40 as all three major U.S. indexes climbed on Wednesday ahead of Nvidia’s earnings. Over in Asia, markets were mixed, but Hong Kong led losses, falling over 1%.

Japan’s top negotiator drops U.S. trip. Top trade negotiator Ryosei Akazawa canceled a trip to the United States on Thursday over issues related to the U.S.-Japan trade deal. Tokyo said the trip would have involved discussions on U.S. tariff measures, but as “certain points required further technical discussion,” the trip was cancelled.

Qantas soars to record high. Shares of Australian flag carrier Qantas rose to a record high Thursday after its full-year earnings results beat estimates, buoyed by resilient demand across its domestic and international networks. The stock posted a gain of up to 13.59% in early trade.

[PRO] Pros assess if TSMC is a “smart” buy. Nvidia CEO Jensen Huang’s said last week that investors buying TSMC stock would be “very smart.” Analysts from Morningstar, Macquarie and GFM Asset Management share their thoughts with CNBC.