Nvidia Corp might have exceeded Wall Street estimates as its profit jumped, but investors seemed less than impressed.
The company on Wednesday reported a net income of US$16.6 billion. Adjusted for one-time items, net income was US$16.95 billion. Revenue rose to US$30 billion, up 122 percent from a year earlier and 15 percent from the previous quarter.
By comparison, S&P 500 companies overall are expected to deliver just 5 percent growth in revenue for the quarter, FactSet said. Still, Nvidia shares slipped nearly 4 percent in after-hours trading.
Photo: Loren Elliott, Bloomberg
Despite growing revenue, “it appears the bar was just set a tad too high this earnings season,” Carson Group chief market strategist Ryan Detrick said.
“Death, taxes and NVDA [Nvidia] beats on earnings are three things you can bank on,” Detrick said. “Here’s the issue. The size of the beat this time was much smaller than we’ve been seeing. Even future guidance was raised, but again not by the tune from previous quarters.”
The company reported second-quarter adjusted earnings per share of US$0.68, up from US$0.27 a year earlier. Nvidia said it expects third-quarter revenue to grow to US$32.5 billion, plus or minus 2 percent.
Nvidia has led the artificial intelligence (AI) sector to become one of the stock market’s biggest companies, as tech giants continue to spend heavily on the company’s chips and data centers needed to train and operate their AI systems.
Demand for generative AI products that can compose documents, make images and serve as personal assistants has fueled sales of Nvidia’s specialized chips over the past year. Through the year’s first six months, Nvidia’s stock price soared nearly 150 percent and the company is now worth more than US$3 trillion.
The company is planning to increase production of its Blackwell AI chips beginning in the fourth quarter and continuing through fiscal 2026, Nvidia chief financial officer Colette Kress said during an analyst call.
Nvidia expects several billion dollars in Blackwell revenue in the fourth quarter, with shipments of its Hopper graphics processors expected to increase in the second half of the next fiscal year, Kress added.
The company would “have a great next year as well,” Nvidia founder and CEO Jensen Huang (黃仁勳) said in an interview with Bloomberg Television.
Wedbush Securities Inc analyst Dan Ives said the earnings were part of a “historic, meteoric rise from Nvidia and the godfather of AI, Jensen [Huang].”
Investors are picking apart “robust numbers” and trying to find holes in them, Ives added.
Although Nvidia said it estimates about US$32.5 billion in revenue in the third fiscal quarter, some analysts expected a slightly higher figure, he said.
“I view it as kind of like splitting hairs,” Ives said.
The demand for AI technology is only accelerating, he said, echoing Huang’s previous statements that the world is in the midst of the next industrial revolution.
“This is the most watched earnings — not just in tech, but in the market, in many years,” he said. “Investors will initially overreact to any sort of short-lived weakness, but I believe this actually put more fuel into the tank of the bull market.”
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