On Wednesday, Nvidia projected its third-quarter revenue with predictions that closely echoed market approximations. This was viewed as unimpressive by investors who had rallied the firm’s shares, banking on the promise of generative artificial intelligence. The Santa Clara-based company experienced a 5% fall in their shares in after-hours trading. This was despite the fact that Nvidia’s stock, which went down 2%, has seen a rise exceeding 150% this year alone.
The chip manufacturer had set high hopes among its investors after seeing a surge in its shares by over seven times in the previous two years. This marked Nvidia as a major beneficiary of the upswing in shares linked to artificial intelligence. However, each time the company exceeds predictions, it becomes increasingly challenging due to Wall Street raising the bar even higher.
Nvidia has projected a revenue of around $32.5 billion (£24.4 billion), flexible by 2% either way, for the third quarter. This was compared to the average estimate of $31.77 billion forecasted by market analysts, as per LSEG data. The company also anticipated an adjusted gross margin of approximately 75%, flexible by 50 basis points, in the same quarter. The average margin, as predicted by analysts, was anticipated to be 75.5% according to LSEG data. This prediction came after the company reported a 75.7% gross margin in the second quarter, almost meeting the estimated 75.8%.
The company’s sales in its data centre segment grew by 154% to $26.3 billion in the second quarter, which ended on July 28th, surpassing the estimates of $25.15 billion, and saw a 16% growth from the first quarter. The total revenue for the second quarter stood at $30.04 billion, going beyond the estimates of $28.70 billion.
Nvidia has also stated that it anticipates revenues of several billion dollars from its new Blackwell chips in the final quarter, addressing concerns about alleged production delays inhibiting growth.
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