NVIDIA’s Financial Performance and Wall Street Reactions
Wall Street traders leaned towards selling shares, driven by the possibility that NVIDIA might not meet the lofty expectations set for it. The company, which has become the star of the stock markets, released its results this Wednesday after the market close. The tech-heavy Nasdaq Composite fell by in between 1.12% to 1.83%, the S&P 500 dropped 0.6%, and the Dow Jones decreased by approximately 0.39% on the New York Stock Exchange. NVIDIA, with its significant market capitalization, exerted considerable pressure on the sector, declining by 2.1%.
Market Movements and Investor Sentiments
Meanwhile, Chile’s S&P IPSA rose by 0.1% to 6,385.52 points, in a trading day marked by low transaction volumes. Enel Américas (1.81%), CMPC (1.58%), and Oro Blanco (1.15%) were the “winners” of the day within the index, although 17 of its 29 stocks declined.
NVIDIA’s Q2 Financial Highlights and Forecasts
In the second quarter, NVIDIA reported a GAAP diluted earnings per share (EPS) of $0.67, a 12% increase from the previous quarter and a 168% increase year-over-year. The non-GAAP diluted EPS was $0.68, up 11% from the previous quarter and 152% year-over-year. NVIDIA achieved a net profit of $16.599 billion (14.858 billion euros) in its second fiscal quarter, ending in July. This figure represents a 168.2% increase compared to the same quarter of the previous year. NVIDIA’s revenues between May and July reached a record $30.040 billion (26.889 billion euros), up 122.4% year-over-year, while costs increased by 84.6% to $7.466 billion (6.683 billion euros).
“The demand for Hopper 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. Blackwell samples are being shipped to our partners and customers. Spectrum-X Ethernet for AI and NVIDIA AI Enterprise software are two new product categories reaching significant scale, demonstrating that NVIDIA is a full-stack, data center-scale platform. Across the stack and ecosystem, we are helping frontier model creators, consumer internet services, and now enterprises. Generative AI will revolutionize every industry.”
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Q3 Projections and Investor Reactions
On Wednesday, NVIDIA forecasted third-quarter revenue of $32.5 billion, plus or minus 2%, compared to the average analyst estimate of $31.77 billion, according to data from LSEG. The company’s CEO and founder, Jansen Huang stated that it expects several billion dollars in revenue from its latest Blackwell chips in the fourth quarter, addressing concerns about production delays that could hinder growth. NVIDIA anticipates an adjusted gross margin of 75%, plus or minus 50 basis points, in the third quarter. According to LSEG data, the average analyst expectation is a 75.5% gross margin. In the second quarter, the gross margin was 75.7%, compared to an average estimate of 75.8%.
Sales in NVIDIA’s data center segment grew 154% to $26.3 billion in the second quarter ended July 28, surpassing estimates of $25.15 billion. Compared to the first quarter, this was a 16% increase. “Nvidia’s (NVDA) 6% decline Thursday after posting solid quarterly results weighed on other chip stocks and could serve as another reminder that mega caps have lost some shine. That’s not exactly a bad thing for investors hoping the hundreds of other stocks in the S&P 500 not included among mega caps can continue to gain traction in a broader rally.” wrote Joe Mazzola, Chief Trading and Derivatives Strategist at Charles Schwab regarding NVIDIA. “Besides that, there was nothing in Nvidia’s earnings report or call that led analysts to diagnose any underlying issues with its business, particularly AI.”
Economic Indicators and Federal Reserve Outlook
Later this week, investors await the first revision of the U.S. GDP for the second quarter and the July personal consumption and expenditure indices. These data could influence the still minority bet that the Federal Reserve might lower the rate by 50 basis points (bps) instead of 25 bps.
