Nvidia's Stock Tumbles Despite Record Profits as AI Chip Demand Slows

Nvidia's sales forecast fails to meet lofty expectations

(Bloomberg) --Nvidia Corp., the chipmaker at the heart of the artificial intelligence boom, gave a revenue forecast that fell short of some of the most optimistic estimates, stoking concern that its explosive growth is waning. Third-quarter revenue will be about $32.5 billion, the company said Wednesday. Though analysts had predicted $31.9 billion on average, estimates ranged as high as $37.9 billion. The company also signaled that it was working through production snags with its highly anticipated new Blackwell chip, weighing on the shares in late trading. The outlook threatens to tamp down an AI frenzy that has transformed Nvidia into the world's second-most-valuable company. The chipmaker is the key beneficiary of a race to upgrade data centers to handle AI software, and its sales forecasts have become a barometer for that spending boom. The shares fell about 4% in extended trading after the report was released. They had more than doubled this year through Wednesday's close, following a gain of 239% in 2023. Coming into the announcement, there was concern that Nvidia was having problems with its new Blackwell design. Nvidia acknowledged that there were issues with production, saying that it was making changes to improve its manufacturing yield -- the number of functioning chips that come out of factories. At the same time, the company said it expects to bring in "several billion dollars" of revenue in the fourth quarter from the product. "The anticipation for Blackwell is incredible," Chief Executive Officer Jensen Huang said in a statement. Nvidia is coming off a string of quarters that shattered Wall Street expectations -- even as analysts continued to raise estimates. But most of that growth has come from a small group of customers. About 40% of Nvidia's revenue stems from large data-center operators -- companies like Alphabet Inc.'s Google and Meta Platforms Inc. -- which are pouring tens of billions of dollars into AI infrastructure. Though Meta and others have increased their capital expenditure budgets this earnings season, there's been concern that the amount of infrastructure being put in place exceeds current requirements. That could lead to a bubble. But Nvidia's Huang has maintained that this is only the beginning of a new era for technology and the economy. Expectations are lofty. Nvidia has been the best performing stock in the S&P 500 Index this year, eclipsing gains by all other semiconductor stocks. At a market value of more than $3 trillion, Nvidia is worth roughly the same amount as the next 10 largest chipmakers combined. Nvidia made its name by selling video-game cards, but is now best known for so-called AI accelerators. These chips, derived from its graphics processors, are used to develop artificial intelligence software by bombarding it with information. The process, known as training, makes AI models better at recognizing and responding to real-world inputs. Nvidia's components are also used in systems that then run the software, a stage known as inference, and help power services such as OpenAI's ChatGPT. Last quarter's topped Wall Street projections, and the Santa Clara, California-based company's board approved an additional $50 billion in stock buybacks. Nvidia's revenue more than doubled to $30 billion in the second quarter, which ended July 28. Excluding certain items, profit was 68 cents a share. Analysts had predicted sales of about $28.9 billion and earnings of 64 cents a share. Nvidia got a jump on other chipmakers because its technology was well-suited to the needs of AI. But rivals are trying to catch up. Advanced Micro Devices Inc. is now its closest competitor, with Intel Corp. -- once the world's biggest chipmaker -- trailing further behind. Their combined revenue from the market is only about 5% of Nvidia's total. Nvidia's data-center division -- now by far its largest source of sales -- generated $26.3 billion of revenue last quarter. Gaming chips provided $2.9 billion. Analysts had given targets of $25.1 billion for the data-center unit and $2.79 billion for gaming. Blackwell is expected to generate a fresh wave of growth when it rolls out in the second half of the year. Analysts have downplayed concerns about delays, noting that the company still enjoys huge demand for its current generation of products. That could help Nvidia cope with any delays without a big financial hit.

Nvidia Tumbles After Disappointing Forecast, Blackwell Chip Snags

(Bloomberg) -- Nvidia Corp. failed to live up to investor hopes with its latest results on Wednesday, delivering an underwhelming forecast and news of production snags with its much-awaited Blackwell chips. Follow news and analysis of Nvidia's earnings report in our live blog. The company's quarterly report -- the most anticipated part of the tech industry's earnings season -- met or beat analysts' estimates on nearly every measure. But Nvidia investors have grown accustomed to blowout quarters, and the latest numbers didn't qualify. Listen to the Bloomberg Daybreak Europe podcast on Apple, Spotify or anywhere you listen. Moreover, Nvidia's next big cash cow -- the new Blackwell processor lineup -- has proved more challenging to manufacture than anticipated. The product is the next generation of the company's dominant artificial intelligence processor. Fears of delays contributed to a stock decline of as much as 5.3% in premarket trading on Thursday before New York exchanges opened. The shares had more than doubled this year through Wednesday's close, following a gain of 239% in 2023. "It was up against lofty and unsustainable expectations," Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada said in a note. Third-quarter revenue will be about $32.5 billion, the company said. Though analysts had predicted $31.9 billion on average, estimates ranged as high as $37.9 billion. The disappointing outlook threatens to tamp down an AI frenzy that has transformed Nvidia into the world's second-most-valuable company. The chipmaker is the key beneficiary of a race to upgrade data centers to handle AI software, and its sales forecasts have become a barometer for that spending boom. Heading into the announcement, there was concern that Nvidia was having problems with its new Blackwell design. The company acknowledged that there were issues with production, saying that it was making changes to improve its manufacturing yield -- the number of functioning chips that come out of factories. At the same time, the company said it expects to bring in "several billion dollars" of revenue in the fourth quarter from the product. Supplies will be plentiful after manufacturing gains momentum, Chief Executive Officer Jensen Huang said later during a Bloomberg Television interview. "We're going to have lots and lots of supply, and we will be able to ramp," he said. Nvidia is coming off a string of quarters that shattered Wall Street expectations -- even as analysts continued to raise estimates. But the amount of upside has been trending down. Most of Nvidia's growth also has come from a small group of customers. About 40% of Nvidia's revenue stems from large data-center operators -- companies like Alphabet Inc.'s Google and Meta Platforms Inc. -- which are pouring tens of billions of dollars into AI infrastructure. Though Meta and others have increased their capital expenditure budgets this earnings season, there's been concern that the amount of infrastructure being put in place exceeds current requirements. That could lead to a bubble. But Nvidia's Huang has maintained that this is only the beginning of a new era for technology and the economy. Expectations were lofty. Nvidia has been the best performing stock in the S&P 500 Index this year, eclipsing gains by all other semiconductor companies. At a market value of more than $3 trillion, Nvidia is worth roughly the same amount as the next 10 largest chip firms combined. Nvidia made its name by selling video-game cards, but is now best known for so-called AI accelerators. These chips, derived from its graphics processors, are used to develop artificial intelligence software by bombarding it with information. The process, known as training, makes AI models better at recognizing and responding to real-world inputs. Nvidia's components are also used in systems that then run the software, a stage known as inference, and help power services such as OpenAI's ChatGPT. Last quarter's results topped Wall Street projections, and the Santa Clara, California-based company's board approved an additional $50 billion in stock buybacks. Nvidia's revenue more than doubled to $30 billion in the fiscal second quarter, which ended July 28. Excluding certain items, profit was 68 cents a share. Analysts had predicted sales of about $28.9 billion and earnings of 64 cents a share. Nvidia got a jump on other chipmakers because its technology was well-suited to the needs of AI. But rivals are trying to catch up. Advanced Micro Devices Inc. is now its closest competitor, with Intel Corp. -- once the world's biggest chipmaker -- trailing further behind. Their combined revenue from the market is only about 5% of Nvidia's total. Nvidia's data-center division -- now by far its largest source of sales -- generated $26.3 billion of revenue last quarter. Gaming chips provided $2.9 billion. Analysts had given targets of $25.1 billion for the data-center unit and $2.79 billion for gaming. Blackwell is expected to generate a fresh wave of growth when it rolls out in the coming months. Analysts have downplayed concerns about delays, noting that the company still enjoys huge demand for its current generation of products. That could help Nvidia cope with any delays without a big financial hit. In describing its challenges with Blackwell, Nvidia said it had to change a mask production step to improve its yield. A mask is the template used to burn the circuit pattern into materials deposited on a disk of silicon. Production of Blackwell is set to ramp up in the fourth quarter and continue into the next fiscal year, Nvidia said. During a post-results conference call, analysts sought more details on the amount of revenue that the new Blackwell chips would deliver and when. Huang and Chief Financial Officer Colette Kress stuck to their promise of billions of dollars in the fourth quarter, refusing to elaborate further. The stock extended its declines as the call went on and answers weren't provided. In his typical fashion, Huang made high-level predictions on the future of the computing industry, arguing that a trillion dollars of equipment will be needed to replace outmoded gear in the world's data centers. That replacement process is just beginning, he said. AI is taking over computer search, helping companies speed up their business processes, and needed by countries to secure data, he said. "It's affecting how every layer of computing is done," Huang said. (Updates with premarket trading in fourth paragraph.)

Nvidia stock falls despite revenue soaring 122pc

Nvidia has become one of the world's most valuable companies thanks to its focus on AI chips, but great results don't seem good enough for some investors. Nvidia continues to see massive revenue boosts thanks to the AI boom, but its success is not enough to satisfy some of its investors. The chipmaker made more than $30bn in revenue in its second fiscal quarter 2025, a 15pc increase from the first quarter and a 122pc increase year-on-year. The company's net income grew to more than $18.6bn, a year-on-year increase of 168pc. Diluted earnings per share also went up by 168pc during the same period. Despite these record results, Nvidia's share price fell after the results were announced. Analysts speaking to the BBC claim that Nvidia's rate of growth is starting to slow. In its earnings report, Nvidia said all of its key sectors - from data centres to automotive and robotics - reported steady growth in the latest quarter. The company also shared a positive outlook on the next quarter and expects revenue to reach roughly $32.5bn. "Nvidia achieved record revenues as global data centres are in full throttle to modernise the entire computing stack with accelerated computing and generative AI," said Nvidia CEO and founder Jensen Huang. "Blackwell samples are shipping to our partners and customers. Spectrum-X Ethernet for AI and Nvidia AI Enterprise software are two new product categories achieving significant scale, demonstrating that Nvidia is a full-stack and data centre-scale platform. Across the entire stack and ecosystem, we are helping frontier model makers to consumer internet services and now enterprises. Generative AI will revolutionise every industry." Nvidia has grown in leaps and bounds in over the past couple of years and is one of the most valuable companies in the world, thanks to its dominant position in providing the bulk of the powerful chips needed to develop generative AI models. But Rodrigo Liangm CEO and co-founder of SambaNova Systems, says Nvidia has "lost some of its sheen" as its next-generation chips are facing delays and "rivals are biting at its heels". Meanwhile, The US Department of Justice is investigating complaints made against Nvidia by its competitors alleging that the AI chipmaker is stifling competition in the chips market. Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.

NVIDIA Shares Tumble 6% Despite $16.6 Billion in Profits -- What's Spooking Investors? - Decrypt

NVIDIA posted blockbuster earnings for the second quarter ending July 28 -- only to watch its stock take a nosedive on Wednesday. The company reported a net income of $16.6 billion, with adjusted net income reaching $16.95 billion after accounting for one-time items. Revenue surged to $30 billion, representing a remarkable 122% increase from the same period last year and a 15% rise from the previous quarter. Despite these strong results, NVIDIA's stock fell nearly 6% in after-hours trading on Wednesday, leaving investors puzzled. At the time of writing, NVIDIA shares are trading at $125.61, giving the company a market capitalization of $3.09 trillion. Over the first half of the year, NVIDIA's stock price surged by nearly 150%. At that point, the stock was trading slightly over 100 times the company's earnings from the prior 12 months. NVIDIA has catapulted the artificial intelligence industry into one of the stock market's most dominant forces as tech giants continue to pour resources into the company's chips and data centers essential for running AI systems. Chief Financial Officer Colette Kress informed analysts during a post-earnings call that countries developing their AI applications and models are expected to add low double-digit billions to NVIDIA's revenue by the end of the financial year in January 2025. The impressive earnings numbers aren't enough to calm investors' nerves. The report was expected to be a critical signal for the ongoing artificial intelligence boom that has energized markets for the last year and a half. Typically, strong earnings would indicate that demand is still robust, but the unexpected dip in shares has sparked concern. During the earnings call, analysts pressed for more details on the anticipated revenue from NVIDIA's next-generation AI processor, Blackwell, which triggered fears of delays that contributed to a stock decline of 8.4% in late trading. In the first-quarter earnings call, CEO Jensen Huang had assured that Blackwell shipments would begin in the second quarter, production would ramp up in the third quarter, and the chips would reach customers by the fourth quarter, with revenue expected this year. However, after production delays, the company has begun shipping revised Blackwell samples to partners and customers, raising doubts about whether NVIDIA can achieve its lofty revenue projections. Nvidia's Blackwell chips are part of the company's next-generation GPU architecture, which is expected to succeed the current Hopper architecture. These chips are designed to significantly improve performance, efficiency, and capabilities, particularly for demanding tasks such as AI, machine learning, and high-performance computing. NVIDIA CEO Jensen Huang acknowledged that the company has delayed ramping up its next-generation Blackwell chips until the fourth quarter, adding to investor concerns. Despite this, Huang and CFO Colette Kress stood by their projection of billions in revenue for the fourth quarter from the Blackwell chips.

Nvidia shares fall after investors spooked by slowing growth

Doubling of quarterly revenues fails to allay concerns about production delays to its next-generation of AI chips Shares in the chip designer Nvidia have fallen after investors were spooked by signs of slowing growth and production issues, despite the artificial intelligence company posting a doubling of quarterly sales. The Silicon Valley company posted a 122% rise in second-quarter revenues to $30bn (£23bn) compared with the same period last year. While that beat average analyst estimates of $28.7bn, investors were spooked by signs of a slowdown in growth, particularly around its next-generation AI chips, code-named Blackwell. The stock fell as much as 7% in pre-market trading, before paring back losses to a 3% fall. The chipmaker is the third most valuable company in the world, with a market value of $3.1tn. Nvidia said the delivery of its Blackwell chips - which are comprised of 208bn transistors that carry out calculations to train its large language model - would be delayed by several months from January. Its chief executive, Jensen Huang, has previously said that Blackwell would generate "a lot of revenue" for the business this year. Simon French, the chief economist and head of research at the investment bank Panmure Liberum told the BBC: "There were just some signs around the edges in numbers that that rate of growth was trying to slow. "Their current AI chip 'hopper' is selling well, but the next one, the next generation Blackwell, has faced some production delays, and that perhaps is one of the reasons why Wall Street, after hours, sold off the stock." Speaking to investors and journalists overnight, Nvidia bosses did not detail the extent of the delay for Blackwell deliveries but said manufacturing issues had been addressed by TSMC, the Taiwanese semiconductor firm that builds the US company's most advanced chips. They added that early samples were now shipping out to a small group of customers The drop in Nvidia's share price dragged on US markets, particularly the S&P 500 index. Nvidia makes up about 6% of the total value of the index and has helped drive its gains this year, after rising more than 160% over the past 12 months. Matt Britzman, an analyst at Hargreaves Lansdown, said Nvidia was facing the major challenge of how to match the hype. "It's less about just beating estimates now, markets expect them to be shattered and it's the scale of the beat that looks to have disappointed a touch."

Nvidia blows past expectations with record Q2 earnings but shares fall

But with expectations leading up to Nvidia's earnings results running red hot, shares of the company fell about 6% in after hours trading on Wednesday. Nvidia reported $30 billion in revenue in the three months ending July 28, up 122% from the year-ago period and well above the $28.9 billion expected by analysts, according to Bloomberg estimates. The results were driven by sales of Nvidia's Hopper GPU, the company said. The strong demand for Nvidia's chips boosted the bottom line, with the chipmaker delivering gross profit margins of 75.1% and adjusted earnings per share of 68 cents. CFO Colette Kress said in prepared remarks that the company "executed a change to the Blackwell GPU mask to improve production yield," and said that the company would ramp production in the fourth quarter of the year. It's unclear if the change relates to design flaws reported by tech news site The Information earlier this month, which the publication said would delay shipments by three months or more. The timeframe is within the company's previous commitment to ship Blackwell in the second half of the year, albeit at the back end of the date range. "In the fourth quarter, we expect to ship several billion dollars in Blackwell revenue. Hopper demand is strong, and shipments are expected to increase in the second half of fiscal 2025," Kress said. Nvidia has been one of the biggest beneficiaries of the AI craze, as internet companies like Google, Meta, and Amazon spend tens of billions of dollars on the infrastructure to provide AI services. While Nvidia faces competition from rival chipmaker AMD and startups including Cerebras and Groq, the company currently controls 90% of the market for AI chips, according to analysts. That dominance has fueled a massive rally in the company's stock, which has more than doubled this year and now represents nearly 7% of the S&P 500.

Nvidia's earnings report shows the problem of being priced for perfection

Nvidia CEO Jensen Huang delivers a keynote address during the Nvidia GTC Artificial Intelligence Conference at SAP Center on March 18, 2024 in San Jose, California. Nvidia reported its fourth-straight quarter of triple-digit revenue growth on Wednesday, sailing past estimates on the top and bottom line while also issuing a forecast that topped Wall Street expectations. The company even bolstered its buyback program with a plan to repurchase $50 billion in shares. But the stock dropped 7% in extended trading. That's life for Nvidia, which has ridden the artificial intelligence boom to a $3 trillion market cap, soaring almost nine-fold since the end of 2022 and surpassing every public company other than Apple in valuation. (It topped Apple for a stretch in June.) In addition to reporting 122% annual revenue growth on Wednesday to over $30 billion, Nvidia said sales in the current period will jump about 80% to roughly $32.5 billion. Analysts were expecting close to $32 billion. However, Stacy Rasgon, an analyst at Bernstein, told CNBC before the report came out that "buyside whispers" were closer to $33 billion to $34 billion, meaning Nvidia would have to dramatically surpass analyst estimates in its guidance in order to see a pop. Rasgon, who recommends buying shares of the chipmaker, said there are no indications that demand is waning for Nvidia's graphics processing units (GPUs), the core infrastructure for developing and running AI models. "There's still a ton of demand," Rasgon said on CNBC's "Closing Bell." "They're still shipping everything that they can sell."

More than $100bn wiped off Nvidia's market value after outlook underwhelms

Shares in Nvidia fell more than 4 per cent in early trading on Thursday as the chipmaker's latest earnings report failed to live up to Wall Street's lofty expectations, despite revenue more than doubling in the last quarter. The declines trimmed more than $100bn from the Silicon Valley-based company's market value, which has soared amid a boom in spending on artificial intelligence. Despite the drop on Thursday, Nvidia's shares are still up more than 140 per cent since the start of 2024. Nvidia, which reported earnings after the market close on Wednesday, sought to reassure investors that it would see "several billion dollars" in revenue this fiscal year from the next generation of its powerful AI chips, despite hitting production problems. Chief executive Jensen Huang told the Financial Times that delays to the company's next-generation AI processor would not derail the chipmaker's plans to produce a new version of its flagship product every year. Revenue in the three months to July 28 was $30bn, up 122 per cent from a year ago and ahead of analysts' forecasts of $28.7bn. Investors, however, had been looking for an even higher revenue forecast. "The revenue outperformance was the smallest relative to expectations in six quarters, so this wasn't the sort of massive beat that Nvidia has often reported," said Deutsche Bank macro strategist Henry Allen. Bank of America analyst Vivek Arya described the share price moves on Thursday as "quarterly noise" and said that Nvidia continued to represent "unique growth at a very reasonable valuation". Some analysts believe that the chipmaking giant's earnings have become as important for US financial markets as the Federal Reserve's monetary policy decisions due to its position as a "bellwether" for the wider technology industry, according to Jefferies strategist Mohit Kumar.

Nvidia's Earnings Top Expectations, But Growth Slows, Weighing on Its Stock

Nvidia CEO Jensen Huang said Blackwell samples are shipping to partners and customers, but provided no additional information amid reports of delays. Nvidia (NVDA) reported better-than-expected revenue and earnings for the second quarter of fiscal 2025, though the pace of its growth slowed. Shares fell in extended trading Wednesday following the release. The chipmaker reported second-quarter revenue of $30 billion, more than doubling from the year-ago period. Net income for the fiscal second quarter was $16.6 billion, also more than double its value the year prior. Both figures exceeded analysts' expectations compiled by Visible Alpha, though growth slowed from previous quarters. Data center revenue for the fiscal second quarter was $26.3 billion, setting a new record high and more than doubling from the year prior. "Hopper demand remains strong, and the anticipation for Blackwell is incredible," Nvidia CEO Jensen Huang said, adding that the chipmaker "achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI." After concerns about reported delays in Nvidia's Blackwell AI chip sent Nvidia's stock price tumbling earlier this month, the chipmaker said Wednesday it began shipping some samples of its Blackwell chip in the second quarter, and expects to "ship several billion dollars in Blackwell revenue" during the fourth quarter as production ramps up. The chipmaker gave a stronger-than-expected outlook for the third quarter of fiscal 2025, with revenue expected to be around $32.5 billion. Nvidia's board also approved a new $50 billion share buyback plan. The company said it had $7.5 billion worth of previously authorized repurchases as of the end of the first half. Despite Nvidia's earnings and revenue beat, the chipmaker's stock was down over 5% at $118.40 in extended trading Wednesday following the company's earnings release.

Why Is Nvidia Stock Down After Reporting Parabolic Growth? | The Motley Fool

The chipmaker has been powering the AI revolution, but sometimes strong growth simply isn't enough. Expectations were high heading into Nvidia's (NVDA -2.10%) fiscal 2025 second-quarter financial report. The company has become the de facto standard bearer for the artificial intelligence (AI) revolution. Its graphics processing units (GPUS) provide the computational horsepower necessary to create the large language models (LLMs) that make generative AI possible. The surging demand for AI has propelled Nvidia's stock into the stratosphere. The stock has gained more than 150% so far this year and more than 750% since the accelerating adoption of AI kicked off early last year (as of this writing). In recent weeks, however, investors have become concerned that Nvidia has simply come too far, too fast, and they are wondering whether the hectic pace of AI adoption could continue. Nvidia answered that question with a resounding "yes," but given the stock's parabolic gains, blockbuster results simply weren't enough. In the second quarter, Nvidia generated record revenue of $30 billion, which surged 122% year over year and 15% quarter over quarter. This gave rise to adjusted earnings per share (EPS) of $0.68. The results sailed past analysts' consensus estimates for revenue of $28.6 billion and EPS of $0.64. Revenue also eclipsed management's forecast of $28 billion. The headliner was Nvidia's data center segment -- which includes chips used for AI -- as revenue of $26.3 billion soared 154% year over year and 16% sequentially, fueled by strong AI adoption among cloud computing and hyperscale data center operators. It wasn't just AI that fed Nvidia's growth, though the data center segment dwarfed results from the company's other segments (all segment gains year over year): Nvidia's gross margin of 75.1% was up compared to 70.1% in the prior year quarter, largely due to the company's enormous pricing power. That said, the measure edged lower sequentially from 78.4% in Q1. The company had previously signaled margins would moderate throughout the remainder of the year. CFO Colette Kress cited inventory provisions for its Blackwell chips and product mix for the decline. CEO Jensen Huang noted that demand for its current Hopper chip "remains strong," calling anticipation for its next-generation Blackwell architecture "incredible." He went on to note that in recent industry testing, Nvidia's Hopper H200 and the Blackwell B200 chips "swept" the MLPerf benchmark results for AI inference. Despite the best efforts of its rivals, Nvidia chips remain the gold standard for processing AI. Media reports suggested that the new Blackwell chips might be delayed by as much as three months due to design flaws, but Nvidia put those fears to rest. "We shipped customer samples of our Blackwell architecture in the second quarter. We executed a change to the Blackwell GPU mask to improve production yield. Blackwell production ramp is scheduled to begin in the fourth quarter and continue into fiscal 2026." Another by-product of Nvidia's growth trajectory is the tremendous amount of cash the company is generating, as free cash flow more than doubled to $13.5 billion. As a result, Nvidia is increasing its returns to shareholders. The board of directors approved an additional $50 billion in share buybacks, adding to the $7.5 billion remaining on its existing authorization. These factors have combined to fuel a robust outlook for the third quarter. Management is guiding for revenue of $32.5 billion, which would represent year-over-year growth of 80%. That's a deceleration from the triple-digit growth Nvidia has delivered in each of the past five quarters -- but investors have long known that growth of that magnitude couldn't continue indefinitely. Yet, the numbers show investors were seemingly disappointed. Nvidia stock was down roughly 7% in after-hours trading (as of this writing,) but it's too early to tell what tomorrow will bring. Taking a step back, the company's results continue to defy the odds, but a deceleration in its parabolic growth rate was inevitable. Nvidia's star is still burning brightly, and the long-term investing thesis is intact. Taken together, Nvidia's durable competitive advantage, strong results, and robust outlook show the company still has a long runway for growth ahead.

Nvidia beats expectations but disappoints investors' sky-high expectations - SiliconANGLE

Nvidia beats expectations but disappoints investors' sky-high expectations When your stock has been called "the most important on planet Earth" by Goldman Sachs Group, it's hard to exceed expectations. That's the challenge Nvidia Corp. encountered today when it announced 122% growth in second-quarter revenue and earnings. That beat analyst expectations and the company raised its revenue estimates for the third quarter, only to see its shares fall more than 7% after hours. The pullback is perhaps unsurprising given that the company has posted operating earnings surprises of between 10% and 31% each of the last four quarters. "This is the problem with being the face of an entire movement," said Alvin Nguyen, senior analyst at Forrester Research Inc. "We want to be wowed by larger and larger margins every time." There was little in the numbers to indicate that Nvidia's core graphics processing unit business fueling the generative artificial intelligence craze is under serious competitive pressure. Earnings per share of 68 cents was way up from 27 cents a year earlier and beat analysts' expectations of 64 cents. Revenue of $30.04 billion, up from $13.51 billion a year earlier, beat the consensus estimate of $20.75 billion. Data center revenue jumped 154%, to $26.3 billion. Net profit more than doubled, to $16.6 billion. Nvidia raised revenue expectations for the third quarter to $32.5 billion, slightly ahead of the consensus forecast of $31.77 billion. If there was any weakness in the results, it was in the quarter's 75.1% gross profit margin, down from 78.4% the previous quarter. Chief Financial Officer Colette Kress blamed the decline on design changes to its next-generation Blackwell GB200 GPUs. Nvidia recently announced a delay in Blackwell's rollout, although it said it expects to ramp up shipments in the fourth quarter and generate several billion dollars of revenue. "Blackwell is an AI infrastructure platform that took nearly five years and seven one-of-a-kind chips to realize," said Chief Executive Jensen Huang (pictured). "Customers want to deploy it as soon as they get their hands on it." Huang said Blackwell will fuel the rise of what he called "AI factories," which are data centers outfitted with high-speed networks and the cabling, power and cooling to support extremely process-intensive workloads. "Global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI," he said. Though the growth in Nvidia's data center business has been impressive, Forrester's Nguyen said the company may be putting too many eggs in that basket. "I always worry when too much revenue is being focused on too few markets," he said, noting, "It's not their fault. The market wants it." Building new data centers and retrofitting existing facilities is costly and not even practical in markets where power and water supplies are constrained, he said. "In some areas you can't build a data center because it takes away power from 20,000 homes," he said. "There's a lot of local government pushback." As a result, Nvidia's expectations of nearly limitless growth in data center capacity may be unrealistic. Nevertheless, hyperscaler cloud providers are figuring out ways around those barriers and they could comprise more than 45% of Nvidia's data center revenue over the next several years, Lucas Keh, analyst at global research firm Third Bridge Group Ltd., said in remarks distributed to media outlets. "The GPU build out/revenue run rate is set to continue for the next 12 to 18 months," he said. "Our experts have opined that 60% to 70% of hyperscaler training will be done on Blackwell by the end of 2025." Accelerated computing is a concept Nvidia has been promoting to compensate for the high-power consumption of generative AI models and the overall slowdown in the pace of performance improvements of CPUs. Accelerated computing uses specialized hardware -- in particular GPUs - to speed up work dramatically using parallel processing and software that offloads work from central processing units and can execute tasks in serial fashion. "CPU scaling has slowed to a crawl and yet demand hasn't slowed," Huang said. "The answer is accelerated computing. It allows you to compute at a much larger scale at lower cost and with much lower energy consumed. It's not unusual to see someone saving 90% of their computing cost." Investors have been watching nervously over the past several quarters and rivals such as Advanced Micro Devices Inc. and Intel Corp. have set their eyes on the GPU market. There have also been reports that China's Huawei Technologies Co. Ltd. may be close to producing GPUs that equal the performance of Nvidia's current H100 line. That could be a problem in the Chinese market, which "grew sequentially and is a significant contributor to our data center revenue," despite government export restrictions, Kress said. For now, Nvidia remains the undisputed leader in AI silicon. MarketWatch columnist Louis Navellier reported that Alphabet Inc. has ordered more than 400,000 GB200 chips at a price of over $10 billion. Meta Platforms Inc. has also placed a $10 billion order to supply OpenAI LLC with 55,000 to 65,000 GB200 GPUs by the first quarter of 2025. Nevertheless, Nvidia has been working to diversify its revenue stream beyond GPUs. This year it has launched dozens of NIMs, which are packaged microservices that can be used to accelerate the deployment of foundation models on cloud platforms. It has also amped up its release of CUDA-X libraries, which are building blocks for essential AI development tasks such as data preparation, customization and training development. The software business is growing, but it exists primarily to move more hardware. "New libraries open new markets for Nvidia," Huang said. Networking has also become a major revenue source, contributing $3.7 billion during the quarter. The company said its high-speed Spectrum-X Ethernet networking platform is being broadly adopted by cloud service providers and enterprises. "Our networking footprint is much bigger than ever before," Huang said. Nguyen likened the diversified revenue streams to the "castle and moat" strategy in which GPUs are the castle and the moats are partnerships and ancillary businesses that keep competitors at bay. "They have such a lead and so many people are familiar with their GPUs that they can optimize to a level others can't," he said. "All their platforms are going to be supported on day zero and Nvidia in some cases doesn't have to lift a finger." Natalie Hwang, founding managing partner of Apeira Capital Advisors LLC, saw little reason to worry. "The true value of AI is still emerging," she said. "As a key industry bellwether, Nvidia provides an early indication for those looking to get ahead of market consensus before the broader market fully appreciates AI's implications." During the first half of fiscal 2025, Nvidia returned $15.4 billion to shareholders in the form of shares repurchased and cash dividends.

Nvidia just showed how hard it is to be the AI king

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. What's working against Nvidia, however, are the sky-high expectations investors keep setting for the Silicon Valley chipmaker, especially as they get antsy over returns on AI investments, analysts and industry experts told Business Insider. "The numbers are stellar," Jacob Bourne, an analyst for Emarketer, told Business Insider. "The problem is that investors keep raising the bar on Nvidia each quarter, and the expectations have become unrealistic." Emarketer is a subsidiary of Axel Springer, which also owns Business Insider. Similarly, Daniel Newman, CEO of The Futurum Group, a tech research firm, told BI that the second quarter numbers Nvidia showed were strong "but that level of good was already priced in" by investors. By standard measures, Nvidia did more than just fine this quarter. The company reported $30.04 billion in revenue this quarter, more than doubling its revenue from last year at the same period and beating analyst expectations of $28.86 billion. Still, those numbers received a tame reaction on Wall Street. What Newman described as "almost an irrational exuberance" around Nvidia was reflected in the company's stock, which was down 6.9% after hours on Wednesday at the time of publication. Questions also loomed over concerns around shipment delays for the company's Blackwell GPUs, which are expected to replace Nvidia's Hopper, ahead of Wednesday's earnings call. "The recent delay in Blackwell's market release timeline added to investor jitters," Bourne told BI. On Wednesday's earnings call, Nvidia CEO Jensen Huang promised that the company would be shipping out billions of dollars worth of Blackwell GPUs by the fourth quarter -- a metric that analysts warned was vague. Nvidia executives on the call remained vague about the anticipated gains expected from Blackwell despite investor follow-up Qs. "Saying that they're going to make several billion dollars this year on Blackwell -- that's a pretty big range," Grace Harmon, connectivity and tech analyst with Emarketer, told BI. Overall, experts said that Nvidia has largely tempered any concerns around Blackwell shipment delays, but it will be crucial for the company to deliver. "We believe it will be harder for the company to beat expectations by wide margins; however, the company should receive a boost with the launch of its new Blackwell chips later this year," Logan Purk, a tech analyst at Edward Jones, wrote. Even as lofty expectations may work against Nvidia, Huang continued to set a high bar for the company's near future. "Next year is going to be a great year. We expect to grow our data center business quite significantly," Huang said on the call. "Next year, Blackwell is going to be going to be a complete game changer for the industry, and Blackwell is going to carry into into the following year."

Nvidia reports 122% revenue growth on surging demand for data center chips

A Nvidia HGX H100 server arranged at the company's headquarters in Santa Clara, Calif., in 2023.Marlena Sloss / Bloomberg via Getty Images file Nvidia reported earnings after the bell that beat Wall Street expectations for earnings and guidance, and provided stronger-than-expected guidance for the current quarter. Nvidia shares fell nearly 4% in extended trading. Nvidia said it expected about $32.5 billion in current quarter revenue, versus $31.7 billion expected by analysts, according to StreetAccount. Net income during the quarter was $16.6 billion, or $0.67 per share, versus $6.18 billion, or $2.48 per share, in the year-ago period. Nvidia is the primary beneficiary of the ongoing artificial intelligence boom. Its market value has expanded more than nine times since the end of 2022 and was up 34% since the company's last earnings report. Revenue continues to surge at the chipmaker, rising 122% on an annual basis during the quarter. Revenue in Nvidia's data center business, which includes its AI processors, climbed 154% from a year earlier to $26.3 billion, accounting for 88% of total sales. IT also topped StreetAccount expectations of $25.24 billion. Much of these sales go to a handful of cloud service providers and consumer internet companies like Microsoft, Alphabet, Meta, and Tesla. Nvidia's chips, such as the H100 and H200, are used in the vast majority of generative AI applications, such as OpenAI's ChatGPT. Nvidia's gaming business used to be the company's primary focus before AI datacenter chips started growing so strongly. Gaming revenue increased 16% from a year ago to $2.9 billion, beating StreetAccount's estimate of $2.7 billion. Nvidia said it approved $50 billion in share buybacks.

NVIDIA Shares Sink Amidst Tepid Guidance Beat, Blackwell "Mask" Change

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. NVIDIA Corporation beat analyst revenue and guidance estimates in its results for the second quarter of the fiscal year 2025. The firm posted $30 billion in revenue, for 122% in annual growth along with $16.9 billion in non GAAP net income for 152% annual growth. Crucially though, NVIDIA also guided $32.5 billion revenue for the current quarter, which is its third quarter for the fiscal year 2025. This surpassed LSEG revenue guidance estimates of $31.69 billion, in a tepid beat that was followed by rapid volatility in the firm's shares during aftermarket trading. As the results became official, NVIDIA's shares initially dropped by 9.24% before jumping by 5.28% to ensure that the stock was down by an overall 2.62% at 4:28 p.m. Eastern Time. Heading into today's release, everyone's key question for NVIDIA was about its Blackwell GPU lineup. Word on the street has claimed for weeks that Blackwell has been delayed due to design problems, and NVIDIA's prepared remarks from CEO Jensen Huang addressed the issue right off the bat. Huang led with the firm's Hopper GPU lineup, sharing that "demand remains strong," He added that "anticipation" for Blackwell is "incredible" and "samples are shipping to our partners and customers." On the revenue front, NVIDIA earned $30 billion in revenue. This marked a 122% annual growth and beat estimates of $28.68 billion with a hefty margin. However, analysts were also on the watch out for NVIDIA's guidance for the current quarter since it helps gauge the ongoing industry interest in upgrading to AI computing products. On this front, NVIDIA guided $32.5 billion in revenue, which was roughly $505 million above analyst estimates. The firm's stock, which initially jumped by 2.49% in the immediate aftermath of the earnings, was unable to sustain the trend. It proceeded to tank by 9.24% before paring the losses and gaining 4.31%. NVIDIA's earnings report, which is unique in the sense that it is accompanied by comments from the CFO was more forthcoming for Blackwell. As part of her remarks, CFO Collette Kress shared that NVIDIA's customers "continue to accelerate their Hopper architecture purchases while gearing up to adopt Blackwell." She then proceeded to admit that NVIDIA had undergone a design change for the leading edge artificial intelligence GPU. As per Kress, NVIDIA "executed a change to the Blackwell GPU mask to improve production yield." While the firm shipped Blackwell's customer samples during the second quarter, the GPU's production ramp "is scheduled to begin in the fourth quarter and continue into fiscal 2026," according to the CFO. Subsequently, NVIDIA expects "to ship several billion dollars in Blackwell revenue" in its fourth quarter, which ends in late January. NVIDIA's receivables, which reflect its business partnerships, boomed during Q2. They sat at $14.1 billion and doubled over the year ago quarter's $7 billion. Over Q1, the receivables grew markedly too, as they had sat at $12.4 billion in the previous quarter. NVIDIA also approved a massive $50 billion share repurchase as well as maintaining a $0.01 quarterly dividend per share. The stock was down 4.57% in the aftermarket at 4:52 p.m. ET.

Nvidia Q2 Earnings, Guidance Top Street View As AI Fuels Record Data Center Revenue: Gross Margin Falls Quarter-Over-Quarter, Stock Drops - NVIDIA (NASDAQ:NVDA)

Blackwell 200 production update from the company is on investor radars ahead of the earnings call. Nvidia Corp. NVDA continued its streak of outperformance as the artificial intelligence stalwart's second-quarter earnings and revenue outdid expectations Wednesday. Strong data center revenue boosted the company's topline but the gross margin contracted from the first quarter. Nvidia issued above-consensus third-quarter revenue guidance and announced a $50-billion additional stock repurchase authorization. Despite the positive results, the shares were down 3.6% in after-hours trading. Nvidia's Key Q2 Numbers: The Santa Clara, California-based chipmaker reported earnings and revenue that more than doubled from a year ago and also bettered the numbers from a quarter ago. Here's how the key numbers compare to estimates and prior metrics: Nvidia founder and CEO Jensen Huang said: "NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI. "Hopper demand remains strong, and the anticipation for Blackwell is incredible," he added. The Nvidia CEOalso noted that Blackwell samples were shipping to partners and customers. "Spectrum-X Ethernet for AI and NVIDIA AI Enterprise software are two new product categories achieving significant scale, demonstrating that NVIDIA is a full-stack and data center-scale platform," he said. The sequential drop in gross margin was attributed to inventory provisions for low-yielding Blackwell material and a higher mix of new products within the data center business, potentially referring to the H20 chips developed exclusively for China. See Also: How To Buy Nvidia (NVDA) Stock Nvidia Shareholder Returns: Nvidia's board approved an additional $50 billion in share repurchases without expiration. The company said it will pay its next quarterly cash dividend of 1 cent per share on Oct. 3, to all shareholders of record as of Sept. 12. Nvidia's Q3 Performance By Segment: The data center business reported another quarter of record revenue, which more than doubled year-over-year, thanks to strong demand for Hopper GPU for training and inference of large-language models. The sequential growth came about due to robust demand from consumer internet and enterprise companies. Cloud service provides contributed to 45% of data center revenue, while enterprise and internet companies accounted for more than 50%. The rest of the business segments also grew revenue both year-over-year and sequentially. *percentages may not add up to 100 as OEM and other revenues are left out of the comparisons Nvidia Q3 Outlook: Nvidia earnings are considered a barometer of artificial intelligence spending. The chipmaker said it expects third-quarter revenue of $32.5 billion plus or minus 2%. The consensus estimates are for earnings of 71 cents per share and revenue of $31.69 billion. The company guided to a third-quarter non-GAAP gross margin of 75% plus or minus 50 basis points. For the full-year, Nvidia guided to a non-GAAP gross margin in the mid-70% range. Nvidia's annual earnings and revenue are estimated at $2.75 per share and $121.63 billion, respectively. Nvidia's Earnings Call Focus: The rumored delay in the Blackwell 200 AI accelerator has caused uneasiness among traders. Fund manager Louis Navellier said he expects investors to be glued to the management commentary regarding the timeline for the chip more so than on the quarterly revenue and earnings. TFI analyst Ming-Chi Kuo said he would look for whether the Blackwell 200 re-tape-out would impact profit and margin in the near term. The rumored delay in the AI chip was attributed to a design flaw. Kuo said if the company can provide details to allay investors' concerns about GB200 shipment schedules, it would benefit the stock performance of both Nvidia and its supply chain in the next three months. The earnings call is scheduled for 5 p.m. EDT. Nvidia Stock: The company's stock has been a stellar performer, having gained about 154% year-to-date. This compares to the 17.24% gain for the S&P 500 Index and the 15% advance by the Nasdaq 100 Index. The iShares Semiconductor ETF SOX has added about 18% during the same period. Nvidia ended Wednesday's session down 2.10% to $125.61, according to Benzinga Pro data. Read Next: Nvidia Earnings Round The Corner: Top Investors In Jensen Huang's Company Set To Benefit If Q2 Appeases Street Nvidia CEO Jensen Huang Showcases with GB200 Grace Blackwell Superchips. Photo courtesy of Nvidia. Market News and Data brought to you by Benzinga APIs