Nvidia, the prominent leader in artificial intelligence chips, surpassed Wall Street’s expectations for its fiscal second quarter. However, shares of the company fell in after-hours trading.
The Santa Clara, California-based firm reported earnings of 68 cents per share on revenues of $30.04 billion for the quarter ending July 28, which outperformed analysts’ predictions of 65 cents per share on sales of $28.74 billion. Compared to the same period last year, Nvidia’s earnings skyrocketed by 152%, and sales increased by 122%.
This fiscal second quarter marks Nvidia’s fifth consecutive quarter of over 100% year-over-year growth.
For the upcoming quarter, Nvidia anticipates revenues of $32.5 billion, exceeding the expectations of $31.71 billion. Last year in the same period, the company recorded sales of $18.12 billion.
Despite these positive results, Nvidia’s stock dropped more than 5% to $118.24 in after-hours trading. Throughout 2023, the stock has risen 154% up until Wednesday’s closing.
Nvidia’s stock has been stabilizing around a key buy point of 140.76 for the past 10 weeks, according to IBD MarketSurge charts.
As a major supplier in the generative AI market, Nvidia provides both chips and complete computer systems for AI data centers.
During a conference call, CEO Jensen Huang reiterated that Nvidia plays a pivotal role in transforming modern technology. He stated, “We are at the beginning of our journey to modernize a trillion dollars worth of data centers from general purpose computing to accelerated computing.”
Despite the company’s strong forecast, the stock fell approximately 7% following the earnings call.
Nvidia’s Chief Financial Officer, Colette Kress, mentioned that while the chip supply from manufacturers improved in the quarter, demand is still “well above supply.” Additionally, the demand for Nvidia’s AI systems has expanded to include many Fortune 500 companies, indicating that “the enterprise AI wave has started.”
Noteworthy companies utilizing Nvidia’s AI technology include Accenture, Amdocs, SAP, ServiceNow, and Snowflake. Kress also noted that the company has shipped samples of its new Blackwell processors and expects mass production to begin in the fourth quarter.
Analysts have pointed out that the less-than-expected results could be viewed as a warning sign. Thomas Monteiro from Investing.com suggested that investors anticipated a stronger performance from Nvidia, due to signs of volatility in the tech sector this earnings season.
In addition, Nvidia has announced a new share repurchase program worth $50 billion. At the close of the July quarter, it had $7.5 billion remaining from the previous authorization.
For the second quarter, Nvidia reported record data center revenues of $26.3 billion, an increase of 16% from the previous quarter and 154% from the same quarter last year. CEO Huang expressed confidence in the strong demand for their products.
Before the earnings announcement, Nvidia’s stock experienced a decline attributed to “de-risking” as investors anticipated solid earnings but questioned whether the results would match the remarkable performance seen earlier in the year.
As the day progressed, Nvidia’s shares continued to experience volatility, amid broader market concerns and mixed news about the technology industry.