Nvidia stock climbs following earnings beat, with company projecting $108 billion in revenue for the upcoming quarter
The semiconductor bellwether unveiled its fiscal second-quarter results after markets closed on Wednesday.
— Nvidia surpassed both top- and bottom-line Wall Street forecasts for its fiscal second quarter.
— Management projected $108 billion in revenue for the following quarter, compared with analyst expectations of $103.9 billion.
— Shares gained ground after a brief dip right after the earnings release, trading actively in the extended-hours session on Wednesday.
Nvidia’s
Total quarterly revenue of $96.2 billion exceeded consensus projections of $92.27 billion. Data center revenue reached $89 billion versus estimates of $85.4 billion. Additionally, earnings per share of $2.22 topped forecasts of $2.09.
Shares of the chipmaker rose roughly 4% in after-hours trading while bitcoin
«AI has reached its inflection point,» said CEO Jensen Huang. «Now compute is revenue … And demand is accelerating.»
Third-quarter revenue guidance came in at $108 billion against Wall Street projections of $103.9 billion. The $100 billion threshold is noteworthy, as only 9 S&P 500 companies have previously posted quarterly revenue of $100 billion or higher.
Gross margin for the following quarter, however, was guided to 74%, down from 75% in the second quarter, which likely contributed to the initial share price decline following the earnings announcement.
Thomas Monteiro, senior analyst at Investing.com, said Nvidia’s results signal mounting pressure on profit margins as memory, financing and infrastructure expenses climb. He noted that October guidance for a 74% margin marked the first sequential decline of the current cycle, with elevated memory prices posing a risk to assumptions that margins can stay in the mid-70% range.
The company may also have limited ability to pass costs on to customers, according to Monteiro, as major technology companies contend with higher spending and borrowing costs of their own.
«Overall, looking back, this was a great quarter by almost any measure, but one that also forces a rethink of Nvidia’s trajectory over the medium term,» Monteiro said.
«The long-term AI opportunity remains intact, though. The question is how much of that growth can translate into margins and cash flow along the way.»
During a call with investors following the earnings release, Nvidia CEO Jensen Huang highlighted some of the cost and supply pressures driving that debate.
Huang said the company is collaborating with memory suppliers and securing capacity across power, land and data-center infrastructure as it works to meet demand that outpaces available supply. He also referenced a price increase set to take effect in the first quarter, arguing that customers can generate strong returns from Nvidia systems, which could give the chipmaker some flexibility to pass on higher costs.
UPDATE (August 26, 21:35 UTC): Adds comments from Investing.com senior analyst Thomas Monteiro.
UPDATE (August 26, 21:45 UTC): Adds comments from CEO Jensen Huang during the company’s earnings call.
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