Today I would like to reflect a little on the tyranny that financial analysts exercise over the valuation of companies, and ultimately over the markets. And yes, I say tyranny because the opinions of these experts make the shares of companies rise or fall based on the expectations they place on these companies
The recent fall in the stock market valuation of Nvidia, despite presenting extraordinary financial results, highlights a latent problem in the current business world: the tyranny of expectations imposed by financial analysts and their excessive impact on the markets.
The relentless search for short-term profits and the constant pressure to exceed the often unrealistic forecasts of analysts are creating a distorted environment where the real value of companies, based on innovation, sustainable growth and the generation of long-term value, is relegated to the background.
The importance of financial analysts in the economic ecosystem is undeniable. Their work of researching, analyzing and providing relevant information on the performance of companies is essential for the efficient functioning of markets. However, when their influence translates into an obsession with short-term expectations and the creation of speculative narratives that drive market volatility, a dangerous line is crossed.
The case of Nvidia, a leading company in its sector with solid growth and a promising future, is paradigmatic of this reality. Despite presenting a 122% year-on-year growth in its sales and notable net profits, the fact of not meeting the possibly inflated expectations of some analysts triggered a significant drop in the value of its shares. At least this is my opinion.
These types of disproportionate reactions, motivated by the difference between expectations and reality, generate an environment of uncertainty that harms all the actors involved:
. Companies: They are pressured to prioritize immediate results over long-term strategies, which can affect their capacity for innovation and sustainable growth. A short-term culture is generated where risk-taking and investment in projects with future potential are discouraged.
. Investors: They face artificial volatility in the markets, making it difficult to make rational investment decisions based on the real value of companies. Information is distorted by the noise generated by speculation and short-term predictions.
. Economy in general: Investment in sectors with long-term growth potential, such as renewable energy or biotechnology, which require time and resources to mature, is discouraged.
I think it is necessary to rethink the role of financial analysts in shaping the value of companies and their influence on the markets. The search for greater objectivity, the promotion of a more holistic analysis that considers not only immediate financial results, but also the long-term strategy, sustainability and social impact of companies, are crucial elements to correct this dynamic.
It is essential to promote a culture of long-term investment, where the creation of sustainable value and the innovation capacity of companies are the fundamental pillars to determine their real value. More in-depth and contextualized analysis must be promoted, which consider the particular situation of each company, the dynamics of its sector and the challenges it faces.
The tyranny of short-term expectations benefits a few and harms the majority. It is time to build a more balanced system, where quality information, objective analysis and a long-term vision are the engines that drive economic growth and the creation of real value for society as a whole.
That is what it should be, but I highly doubt it will ever be. Shame !!
EN 
ES