NVIDIA Shines in AI Wave with Earnings Exceeding Expectations Across the Board
-
NVIDIA, the AI leader closely watched by investors, has released its after-hours earnings report. The data shows its Q2 revenue and performance outlook far exceeded expectations, suggesting the AI frenzy may continue.
NVIDIA reported Q2 revenue of $13.51 billion, compared to analysts' expectations of $11.04 billion.
In Q2, data center revenue reached $10.32 billion (analysts expected $7.98 billion), gaming revenue was $2.49 billion (vs. $2.38 billion expected), and automotive revenue came in at $253 million (vs. $309.4 million expected). Adjusted earnings per share were $2.70 (vs. $2.07 expected), with adjusted gross margins at 71.2% (vs. 70.1% expected). The company also approved an additional $25 billion stock repurchase plan. Both revenue and outlook significantly surpassed expectations.
After weak economic data from the U.S. and Eurozone, the 10-year Treasury yield retreated from near 16-year highs, further boosting Wall Street optimism.
Rick Meckler, partner at Cherry Lane Investments, noted NVIDIA's earnings and commentary would be crucial for the broader market: "It's not just their earnings numbers - executives' comments about AI prospects during the conference call will significantly impact market sentiment."
Three months ago, NVIDIA stunned Wall Street by predicting the AI boom would drive ~$11 billion in Q2 revenue. The latest earnings show across-the-board beats, plus the new $25 billion buyback, sending shares up over 9% after hours to record highs.
With surging demand for AI data center processors, NVIDIA provided an optimistic Q3 revenue outlook of ~$16 billion (vs. $12.5 billion analyst consensus).
This outlook highlights Nvidia's position as the primary beneficiary of the AI boom. Faced with surging demand for chatbots and other tools, data center operators are stockpiling the company's processors. Nvidia's data center chip supply division has become its largest revenue source, with Q2 fiscal revenue reaching $10.32 billion, significantly surpassing market expectations of $7.98 billion. This has allowed Nvidia to quickly shake off the impact of the chip industry downturn, achieving its highest sales growth rate in years.
Nvidia stated that demand for gaming GPUs has resumed growth, laptop graphics card demand remains strong, and foresees sustained demand through 2024. The company noted that product supply increases every quarter, with the server platform HGX system being the biggest driver of performance growth.