Nvidia: Despite the company reporting outstanding second-quarter earnings that significantly exceeded market estimates, Nvidia‘s share price plunged. Nvidia’s forecast for the next quarter, however, did not excite Wall Street investors, which caused the stock’s value to decline. At the closing bell, Nvidia’s stock was down 2.1% at $125.61 per share; in after-hours trading, it fell by 6.89%.
Nvidia’s Strong Q2 Performance Driven by AI Demand
With a 122% increase to $30.04 billion, Nvidia’s Q2 revenue more than doubled from the same period in the previous year and handily outperformed projections of $28.70 billion. Driven mostly by AI demand, the company’s data centre division saw a 154% year-over-year gain, generating $26.3 billion and accounting for 88% of Nvidia’s overall sales.
Mixed Reactions to Nvidia’s Q3 Guidance
Despite the stellar Q2 performance, Nvidia’s forecast for the third quarter left investors cautious. The company projected a revenue of $32.5 billion, plus or minus 2%, which was only marginally higher than analysts’ average estimate of $31.77 billion. This conservative outlook led to a lukewarm response from the market.
Margins and Earnings Slightly Above Estimates
Nvidia’s $0.68 earnings per share came in just above the $0.64 predicted. The company’s second-quarter gross margin of 75.7% was just below the average estimate of 75.8% and less than the 78.4% of the prior quarter. Nvidia projects an adjusted gross margin of 75% for the third quarter, give or take 50 basis points.
Nvidia’s Future Outlook and Strategic Moves
By sending samples of its Blackwell chips to partners and clients, Nvidia is advancing its strategy. The company hopes to make several billion dollars from these chips by the end of the fourth quarter. In addition, despite the recent decline in share price, the corporation announced a significant $50 billion share buyback, demonstrating confidence in its long-term growth potential.
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