Nvidia (NASDAQ: NVDA) has been at the forefront of the artificial intelligence (AI) revolution, with its GPUs becoming essential for developing large language models and generative AI. This has led to a meteoric rise in Nvidia's stock, which has gained over 150% this year and more than 750% since early 2023. However, despite the hype and anticipation leading into the company's fiscal 2025 second-quarter financial report, Nvidia's stock experienced a decline following the announcement.
FINANCIAL PERFORMANCE:
Nvidia reported record revenue of $30 billion for the quarter, marking a 122% increase year-over-year and a 15% rise from the previous quarter. This performance significantly surpassed analysts' expectations, who had forecasted $28.6 billion in revenue and $0.64 in earnings per share (EPS). Nvidia reported an EPS of $0.68. The company’s data center segment, which includes AI chips, was the standout performer, with revenue soaring 154% year-over-year to $26.3 billion, driven by robust AI adoption among cloud computing and hyperscale data center operators.
In addition to the data center segment, Nvidia’s other business segments also posted strong growth:
Gaming: Revenue grew 16% year-over-year to $2.9 billion.
Professional Visualization: Revenue increased 20% to $454 million.
Automotive: Revenue rose 37% to $346 million.
Original Equipment Manufacturer (OEM): Revenue climbed 33% to $88 million.
Gross Margins and Challenges: Nvidia’s gross margin for the quarter was 75.1%, up from 70.1% in the same quarter last year but down from 78.4% in the previous quarter. This sequential decline was attributed to inventory provisions for its new Blackwell chips and a shift in product mix. The company had previously warned that gross margins would moderate throughout the remainder of the fiscal year.
Outlook and Market Reaction: CEO Jensen Huang highlighted the continued strong demand for Nvidia’s current Hopper chip, noting that anticipation for the upcoming Blackwell architecture is “incredible.” Nvidia reassured the market that production of the Blackwell chips is on track, with customer samples already shipped and full production set to begin in the fourth quarter of fiscal 2024, continuing into fiscal 2026.
Despite these strong results and positive outlook, Nvidia’s stock fell as investors weighed whether the company’s unprecedented growth is sustainable in the long term. Concerns over whether the AI adoption pace can continue at such a rapid rate contributed to the decline, reflecting the market’s anxiety about Nvidia’s future growth trajectory after such an extraordinary performance.
FINANCIAL PERFORMANCE:
Nvidia reported record revenue of $30 billion for the quarter, marking a 122% increase year-over-year and a 15% rise from the previous quarter. This performance significantly surpassed analysts' expectations, who had forecasted $28.6 billion in revenue and $0.64 in earnings per share (EPS). Nvidia reported an EPS of $0.68. The company’s data center segment, which includes AI chips, was the standout performer, with revenue soaring 154% year-over-year to $26.3 billion, driven by robust AI adoption among cloud computing and hyperscale data center operators.
In addition to the data center segment, Nvidia’s other business segments also posted strong growth:
Gaming: Revenue grew 16% year-over-year to $2.9 billion.
Professional Visualization: Revenue increased 20% to $454 million.
Automotive: Revenue rose 37% to $346 million.
Original Equipment Manufacturer (OEM): Revenue climbed 33% to $88 million.
Gross Margins and Challenges: Nvidia’s gross margin for the quarter was 75.1%, up from 70.1% in the same quarter last year but down from 78.4% in the previous quarter. This sequential decline was attributed to inventory provisions for its new Blackwell chips and a shift in product mix. The company had previously warned that gross margins would moderate throughout the remainder of the fiscal year.
Outlook and Market Reaction: CEO Jensen Huang highlighted the continued strong demand for Nvidia’s current Hopper chip, noting that anticipation for the upcoming Blackwell architecture is “incredible.” Nvidia reassured the market that production of the Blackwell chips is on track, with customer samples already shipped and full production set to begin in the fourth quarter of fiscal 2024, continuing into fiscal 2026.
Despite these strong results and positive outlook, Nvidia’s stock fell as investors weighed whether the company’s unprecedented growth is sustainable in the long term. Concerns over whether the AI adoption pace can continue at such a rapid rate contributed to the decline, reflecting the market’s anxiety about Nvidia’s future growth trajectory after such an extraordinary performance.