NVIDIA’s Q2 Earnings Report and Future Outlook
NVIDIA (NVDA) announced its second-quarter earnings, which, while surpassing expectations in some areas, fell short in data center revenues, affecting stock prices in after-hours trading.
Data center revenue reached $41.1 billion this quarter, slightly below analysts’ predictions of $41.3 billion, according to Bloomberg. This represents a growth from $26.2 billion compared to last year. It’s worth noting that these figures do not account for sales of low-power H20 chips to China.
The company indicated that about half of its data center revenue is derived from large cloud service providers.
In the wake of this news, NVIDIA’s stock price dropped by more than 3% during after-hours trading.
For earnings per share (EPS), NVIDIA reported $1.05, with total revenues of $46.7 billion. Analysts had anticipated an adjusted EPS of $1.01 with revenues around $46.2 billion. In the same period last year, the company reported $0.68 EPS and $30 billion in revenue.
NVIDIA anticipates revenues exceeding $54 billion for the third quarter, which would represent a slight dip of 2%. Expectations were initially set at $53.4 billion. This forecast also does not include H20 chip sales. In addition, the company has authorized a new share buyback worth $60 billion.
Over the past year, NVIDIA’s shares have risen by 35%, reaching over 40% as of Wednesday afternoon. Back in July, chipmakers even became the first companies to surpass a market capitalization of $4 trillion.
However, NVIDIA’s EPS and revenue growth have shown signs of slowing down after the massive increase observed at the onset of the AI boom. The revenue growth rate for this latest quarter appears to be the slowest since Q1 of 2024.
NVIDIA’s CFO, Colette Kress, reported a 1% sequential decline in data center calculations, primarily due to a $4 billion drop in H20 revenue. Meanwhile, the Gaming segment, NVIDIA’s second largest, brought in $4.3 billion, outpacing estimates.
In comments, CEO Jensen Huang noted that the production of the next-generation Blackwell Chips is operating at full capacity, emphasizing extraordinary demand. He remarked, “AI races are on,” highlighting the urgency in the sector.
This report coincides with notable interactions between NVIDIA and the Trump administration. Initially, Trump lifted a previous ban on selling NVIDIA’s chips to China, yet now the company faces a 15% sales fee to the country.
Trump had initially banned chip sales to China in April, then lifted it in July, only to impose the 15% fee later in August. Additionally, he declared a 100% tariff on semiconductor cargo entering the U.S., unless companies commit to domestic production, although NVIDIA is expected to be exempt from these tariffs.
