In summary
- NVIDIA posted impressive second-quarter earnings, but its shares plunged 6% on Wednesday.
- The company reported net income of $16.6 billion and a 122% increase in revenue from last year.
- The stock fell on fears of delays in the launch of the Blackwell processor, despite optimistic revenue projections.
NVIDIA posted impressive earnings for the second quarter ended July 28, only to see its stock plunge on Wednesday.
The company reported net income of $16.6 billion, with adjusted net income of $16.95 billion after accounting for one-time items. Revenue soared to $30 billion, representing a remarkable 122% increase from the same period last year and a 15% increase from the previous quarter.
Despite these strong results, NVIDIA shares fell nearly 6% in after-hours trading on Wednesday, leaving investors baffled. At the time of writing, NVIDIA shares are trading at $125.61, giving the company a market capitalization of $3.09 trillion.
During the first half of the year, NVIDIA’s stock price rose by nearly 150%. At the time, the stock was trading at just over 100 times the company’s trailing-12-month earnings.
NVIDIA has catapulted the artificial intelligence industry into one of the most dominant forces in the stock market as tech giants continue to pour resources into the company’s chips and data centers essential to running AI systems.
Chief Financial Officer Colette Kress told analysts during a post-earnings call that countries developing its AI applications and models are expected to add tens of billions of dollars to NVIDIA’s revenue by the end of the fiscal year in January 2025.
The impressive earnings numbers aren’t enough to calm investors’ nerves. The report was expected to be a critical signal for the continued rise of artificial intelligence that has energized markets over the past year and a half.
Normally, solid earnings would indicate that demand remains robust, but the unexpected drop in stocks has raised concerns.
During the earnings call, analysts pressed for more details on anticipated revenue from NVIDIA’s upcoming artificial intelligence processor, Blackwell, triggering fears of delays that contributed to an 8.4% drop in late trading.
On the first-quarter earnings call, CEO Jensen Huang had assured that Blackwell shipments would begin in the second quarter, production would ramp up in the third quarter and chips would reach customers in the fourth quarter, with revenue expected this year.
However, following production delays, the company has begun shipping revised samples of Blackwell processors to partners and customers.
Nvidia’s Blackwell chips are part of the company’s next-generation GPU architecture, which is expected to replace the current Hopper architecture.
These chips are designed to significantly improve performance, efficiency and capabilities, especially for demanding tasks such as artificial intelligence, machine learning and high-performance computing.
NVIDIA CEO Jensen Huang acknowledged that the company has delayed the launch of its next-generation Blackwell chips until the fourth quarter, raising investor concerns.
Despite this, Huang and Kress maintained their projection of billions in fourth-quarter revenue from Blackwell chips.
Edited by Sebastian Sinclair
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