Nvidia Posts Record Earnings in Q2 But AI Worries Weigh on Shares
Nvidia posted quarterly sales of $46.7 billion, driven by soaring demand for its AI data center chips, yet a cautious forecast sent shares tumbling as investors questioned whether the AI boom is cooling
Topics
News
- Anthropic Foils AI-Powered Cybercrime Spree
- Team Computers and Yotta Data Services Partner to Accelerate AI Adoption in India
- Databricks to Buy Enterprise Feature Store Tecton
- OutSystems Names Ganesh to Accelerate AI-Powered Low-Code Growth in India
- OpenAI to Open First India Office in Delhi by Year End
- Wipro to Buy Harman DTS Business for $375m to Boost AI Engineering
Chipmaker Nvidia, the world’s most valuable publicly traded firm, this week reported another quarter of record sales, but its outlook fell short of the market’s bullish expectations, sending its shares lower on concerns that the artificial intelligence (AI) boom is losing momentum.
The Santa Clara-based firm said revenue in its fiscal third quarter through October will be about $54 billion, broadly in line with the average Wall Street estimate but well below the more optimistic forecasts that had topped $60 billion. Nvidia follows a fiscal year that ends in late January.
The guidance excludes China data center revenue, still constrained by US export curbs and Beijing’s push to curb reliance on American technology.
Initially, Nvidia designed the H20 chip, used in large language models and real-time AI applications in cloud services, for China while adhering to earlier norms allowing legal exports.
However, since April, the US has tightened restrictions, pausing all H20 sales and requiring licenses for further exports.
Even after Washington loosened some restrictions on AI chip exports to China, sales there have yet to recover.
The muted forecast underscored investor unease that the surge in AI spending may be unsustainable.
Earnings during the quarter surged 56% from a year ago to $46.7 billion and grew 6% sequentially.
The focal point of Nvidia’s growth remains its data center segment, powered by the new Blackwell architecture.
The segment contributed $41.1 billion in sales, up 56% from the prior year and 5% from the previous quarter, signaling robust enterprise and cloud demand worldwide.
Nvidia returned $24.3 billion to shareholders year-to-date through repurchases and dividends, while the board approved $60 billion more in share buyback authorization, signaling confidence in future growth.
The company said it will pay its next quarterly dividend on 2 October.
Its operating margins are also expected to remain above 73%, setting it up for another year of record results.
Nvidia shares slipped roughly 4% in late trading after the results.
The shares had gained 35% this year, driving the company’s market capitalization past $4 trillion and cementing its place as the world’s most valuable listed company.
Founded three decades ago and once known mainly for video-game graphics processors, Nvidia has become the dominant supplier of chips that train and run AI systems.
Its revenue has soared, with projections of more than $300 billion by 2028.
The company’s dependence on a handful of hyperscale customers, including Microsoft, Amazon, and other cloud operators that generate about half its revenue, remains a vulnerability.
Nvidia also faces supply challenges as it relies on Taiwan Semiconductor Manufacturing Co., or TSMC, for its most advanced chips, and scaling up capacity has lagged the speed at which customers want to build data centers.
