Nvidia Stock Drops Despite Strong Earnings as Blackwell Delays Loom
Shares of Nvidia Corporation (NVDA) took a hit in after-hours trading on Wednesday despite the company reporting quarterly earnings that beat analysts’ expectations. The AI chip giant reported adjusted earnings per share of 0.68onrevenueof30 billion for its fiscal second quarter, surpassing the consensus estimate of 0.64EPSon28.8 billion in revenue. However, the stock, commonly referred to as NVDA, initially fell as much as 6% in after-hours trading before paring some of those losses.
The strong financial performance marked a continuation of Nvidia’s impressive growth trajectory, with revenue up 122% year-over-year. The company’s data center business, which has been the primary driver of its success, contributed $26.3 billion to the quarter’s total revenue, representing an increase of 154% from the same period last year. This segment now accounts for 87% of Nvidia’s overall revenue.
“Hopper demand remains strong, and the anticipation for Blackwell is incredible,” said Jensen Huang, founder and CEO of Nvidia. “NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.”
Despite the positive earnings report, investors appeared concerned about potential delays in the rollout of Nvidia’s next-generation AI chip, Blackwell. While CFO Colette Kress stated that Blackwell production is scheduled to begin in the fourth quarter with several billion dollars in expected revenue, rumors of potential delays had weighed on the stock leading up to the earnings announcement.
“While the numbers indicate that the AI revolution remains alive and well, the smaller beat compared to the previous quarters adds to the multiple warning signs across the tech space earlier in this earnings season,” said Thomas Monteiro, a senior analyst at Investing.com.
Nvidia’s gaming division, which was once the company’s primary revenue source, contributed $2.8 billion to the quarter’s total, up 16% year-over-year. However, this paled in comparison to the data center segment’s growth.
Looking ahead, Nvidia provided third-quarter revenue guidance of 32.5billionplusorminus231.9 billion. Nonetheless, investors remained cautious, with some questioning the sustainability of the company’s breakneck growth rate.
“There are emerging competitors like AMD that are starting to take a little bit of market share,” Ruben Roy, managing director at Stifel, told Yahoo Finance earlier this week. “But when you look at the overall infrastructure spend cycle, which we think is going to continue to increase, Nvidia appears to us as the best positioned to benefit from [spending].”
Nvidia’s stock has been on a tear this year, up over 150% as of Wednesday’s close. The company is now valued at over $3 trillion, making it one of only three U.S. companies to achieve that milestone. However, the after-hours drop serves as a reminder that even the most high-flying stocks can be subject to volatility, especially when facing potential challenges like product delays.
Nvidia’s earnings report is closely watched by investors and analysts alike due to the company’s outsized influence on the broader tech sector. As a leader in AI chip design and software, Nvidia’s financial performance can have ripple effects across the market.
Overall, while Nvidia’s earnings beat expectations and provided optimistic guidance for the upcoming quarter, investors appeared to be taking a cautious approach, with shares trading lower in after-hours trading. The company will need to continue to deliver strong financial results and manage any potential delays in its product roadmap to maintain its position as a market leader and keep investors confident in its long-term growth prospects.