Nvidia reported strong Q2 earnings and provided upbeat guidance for Q3, yet its stock price fell.
According to Shinhan Securities, Nvidia’s Q2 revenue was $30.04 billion, up 122.4% year-over-year, and its earnings per share (EPS) were $0.68, exceeding market expectations by 4.1% and 6.3%, respectively. Revenue from data centers reached $26.27 billion, a 154.5% increase from the same period last year, driven by demand for large language models and inference AI accelerators, surpassing consensus by 4.7%.
Despite stricter export regulations, demand from China remained strong. Gaming segment revenue rose 15.8% year-over-year to $2.88 billion, boosted by the launch of the GeForce RTX 40 Super series and increased demand for GPUs for AI PCs.
On the earnings release day, Nvidia’s stock fell 2.1% in regular trading and declined further after-hours trading.
Lee Seung Woo, a Eugene Investment & Securities researcher, noted, “Nvidia’s performance remains unmatched, but the market’s expectations were even higher. Concerns are also raised by the fact that margins have declined for the first time in two years.”
Nvidia’s Q3 revenue and gross margin guidance also exceeded market consensus. Strong demand for the Hopper architecture is expected to drive revenue growth, and income from Blackwell sample sales will be recognized in Q3.
Nvidia also announced that purchasing its chips would help big tech companies reduce per-unit costs. The demand for computing power is expected to increase more than 40 times, making high-performance chips essential.
The company clarified that although there were design changes through a mask change for Blackwell, there were no changes in performance. They also forecasted that Blackwell architecture shipments would begin in earnest from Q4, potentially generating billions of dollars in revenue.
Park Sang Wook, a researcher at Shinhan Securities, commented, “Customers seem to have accelerated Hopper purchases while preparing for Blackwell’s introduction. However, the profit contribution from the Blackwell launch is expected to be low.”
The launch of new products could also impact profits. Analysts are projecting an annual gross margin of 76.0% for Nvidia. The company must achieve a gross margin of 76.4% in the fourth quarter to meet market expectations.
Park added, “The outlook for the second half may not meet the overly high expectations of investors.”
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