TLDR:
- Nvidia reported Q2 earnings beating expectations, with $30 billion revenue (122% YoY increase) and $0.68 EPS
- Q3 revenue guidance of $32.5 billion also topped analyst estimates
- Data center business drove growth, bringing in $26.3 billion (154% YoY increase)
- Nvidia announced a $50 billion increase in share buyback authorization
- Despite strong results, Nvidia stock fell 5-7% in after-hours trading
Nvidia, the AI chip giant, reported its fiscal second-quarter earnings on Wednesday, surpassing Wall Street’s expectations but facing a dip in stock price due to sky-high investor expectations.
The company posted adjusted earnings per share of $0.68 on revenue of $30 billion, marking a 122% increase in revenue and a 168% rise in earnings compared to the same quarter last year.
The data center business continued to be Nvidia’s primary growth driver, generating $26.3 billion in revenue, a 154% increase from the previous year.
This segment now accounts for 87% of Nvidia’s total revenue, highlighting the ongoing demand for AI infrastructure in the tech sector.
Nvidia’s gaming division, once the company’s main revenue source, reported $2.8 billion in revenue, up 16% year over year. The company also provided an optimistic forecast for the third quarter, projecting revenue of $32.5 billion, slightly above analyst expectations of $31.9 billion.
Despite these strong results, Nvidia’s stock fell 5-7% in after-hours trading. This reaction underscores the challenges faced by a company that has seen its stock price surge by 154% this year and over 3,000% in the past five years.
The market’s response suggests that merely great numbers may no longer be sufficient to impress investors who have come to expect exceptional performance from the AI juggernaut.
Nvidia CEO Jensen Huang remained optimistic about the company’s future, particularly regarding the upcoming Blackwell chip. “Anticipation for our next-generation Blackwell chip is incredible,” Huang stated.
CFO Colette Kress added that Blackwell production is scheduled to begin in the fourth quarter and continue into fiscal 2026, with expected shipments of “several billion dollars in Blackwell revenue” in Q4.
The company also announced a significant increase in its share buyback authorization, adding $50 billion to the existing $7.5 billion remaining from its previous authorization.
While Nvidia continues to dominate the AI chip market, competitors are not standing idle. AMD recently acquired ZT Systems in a $4.9 billion deal, aiming to bolster its AI system server capabilities.
However, analysts believe Nvidia remains best positioned to benefit from the ongoing AI infrastructure spending cycle.
The trajectory of Nvidia’s stock has broader implications for the market, given the company’s substantial 7% weighting in the S&P 500. As Bespoke Investment Group noted, Nvidia’s “earnings report has become the world’s most important financial news event.”
Looking ahead, Nvidia faces the challenge of maintaining its growth trajectory in a market with increasingly high expectations. The company’s ability to execute on its Blackwell chip production and meet the growing demand for AI infrastructure will be crucial in the coming quarters.
While some investors may be disappointed by the stock’s after-hours performance, Nvidia’s fundamental business remains strong.
The company continues to benefit from the aggressive AI investment strategies of major tech companies, even as these same firms invest in developing their own silicon solutions.
