Nvidia Beats Forecasts Again, Even as Growth Inevitably Slows

Ever since Nvidia first revealed to the world how much it expects to profit from the rise of artificial intelligence in May 2023, the chipmaker has been the poster child of the AI-fueled stock market rally that has propelled the S&P 500 to historic highs. So much so, in fact, that each of the company's earnings releases since then has been considered a make-or-break moment for market momentum, with investors around the world biting their nails, hoping for more positive news from the company that quite literally powers the AI revolution. And so far, Nvidia has always delivered. On Wednesday, the company reported results for the second quarter of its fiscal year 2025 and once again it managed to beat Wall Street's lofty expectations. And yet, perhaps because investors are increasingly anxious over AI's staying power or because revenue growth slowed from 200+ percent to "just" 122 percent, Nvidia shares fell after the announcement and were down as much as 3.4 percent when the market opened on Thursday.

In the three months ended July 28, 2024, Nvidia's revenue grew 122 percent from the same period a year ago, reaching $30 billion compared to its own outlook of $28 billion and analyst expectations of $28.8 billion. Once again, Nvidia's data center business was at the heart of the company's blowout quarter, as it saw a 154-percent jump in revenue versus a year ago and accounted for more than 87 percent of total sales. Net income amounted to $17.0 billion in the past quarter, which is nearly three times the full-year profit for fiscal 2023, as Nvidia's gross margin remained vaery high at 75 percent. For the current quarter, Nvidia expects revenue of $32.5 billion, which would be a 79-percent increase over the same quarter of last year.

"Hopper demand remains strong, and the anticipation for Blackwell is incredible," founder and CEO Jensen Huang said in a statement, referring to current and next-generation chips. "Nvidia achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI," he added." Addressing fears of a delay in Blackwell chip production, Nvidia CFO Colette Kress confirmed that the production ramp for the highly anticipated chip is now scheduled to begin in the fourth quarter, adding that the company expects to "ship several billion dollars in Blackwell revenue" before the end of the fiscal year.

To further signal confidence, Nvidia announced the authorization of $50 billion in stock buybacks in addition to $7.5 billion remaining under its current share repurchase program.