Nvidia, the leading company in artificial intelligence chips, reported late Wednesday that it had surpassed Wall Street expectations for its fiscal second quarter and projected stronger guidance for the upcoming period. Despite this positive performance, Nvidia’s stock fell in after-hours trading.
For the quarter ending July 28, the California-based firm reported adjusted earnings of 68 cents per share on revenues of $30.04 billion. Analysts had anticipated earnings of 65 cents per share and revenues of $28.74 billion. Nvidia’s earnings showed a remarkable year-over-year increase of 152%, while sales rose by 122%. This marked the company’s fifth consecutive quarter of triple-digit growth.
Looking ahead, Nvidia predicted revenues of $32.5 billion for the current quarter, which exceeds analysts’ expectations of $31.71 billion. In the same quarter last year, Nvidia’s revenues were $18.12 billion.
In after-hours trading, Nvidia’s shares fell over 5% to $118.24. However, the stock is up by 154% year-to-date through Wednesday’s close.
The company has been consolidating its share prices for the past 10 weeks, with a buy point identified at $140.76, according to market charts.
Nvidia plays a critical role in the generative AI sector, providing chips and entire computer systems for AI data centers.
During a conference call with analysts, Nvidia’s Chief Financial Officer, Colette Kress, indicated that the supply of chips from contract manufacturers improved in the recent quarter, but demand remains significantly higher than supply. She noted that the demand for Nvidia’s AI systems has expanded beyond just hyperscale cloud service providers. Now, the nearly all Fortune 500 companies are engaged with Nvidia on AI projects, marking the onset of an “enterprise AI wave.”
Kress also mentioned that Nvidia is on schedule to begin shipping its next-generation Blackwell processors in volume during the fourth quarter.
However, some analysts expressed concerns about the stock’s performance, noting that investors may have anticipated a more substantial growth announcement. According to Thomas Monteiro, a senior analyst at Investing.com, a smaller-than-expected earnings beat could signal caution, especially given indicators of challenges facing the tech sector in this earnings season.
Nvidia also unveiled an additional $50 billion share buyback plan that has no expiration date. At the end of July, the company had $7.5 billion remaining under its earlier repurchase authorization.
The data center segment achieved a record revenue of $26.3 billion, reflecting a 16% increase from the previous quarter and a 154% increase from the same quarter last year.
Looking ahead, Nvidia’s stock has experienced some fluctuations, declining ahead of the earnings report. An analyst attributed this decline to “de-risking,” as investors assessed what level of performance would be sufficient to sustain this year’s significant stock increase.
Overall, Nvidia’s upcoming reports and initiatives continue to position the company as a pivotal player in the AI and technology sectors.