Earnings
Better-than-expected Q2 earnings were released by Nvidia on Wednesday, along with an announcement of a $50 billion stock repurchase program.
The firm announced Q2 adjusted earnings of $0.68 per share on revenue of $30.04 billion for the three months ended July 28, above projections of $0.64 and $28.68 billion, respectively.
A 154% increase in data centre revenue to $26.27B from the same period last year helped to support the better quarterly performance.
Revenue for Q3 is predicted to be $32.5 billion, give or take 2%, above Wall Street projections of $31.9 billion.
The Blackwell AI chip manufacturer also stated that it planned to increase production rates beginning in Q4 and continuing through the 2026 fiscal year.
According to the business, Nvidia anticipates shipping "several billion dollars in Blackwell revenue" in Q4.
Wall Street Views
Despite some of the chipmaker's estimates falling short of expectations, analysts remained optimistic about NVIDIA, with a strong product line and persistent demand from artificial intelligence projected to support profitability.
Nvidia's stock fell as much as 8.5% in after-hours trading, despite the company exceeding forecasts for its May–July earnings.
However, both its gross margin forecast and its revenue prediction for the current quarter—roughly $32.5 billion—missed certain projections. Furthermore, compared to previous quarters, the growth speed was predicted to slow down.
Nvidia also acknowledged that, although still expecting to release its Blackwell line of cutting-edge AI processors by the fourth quarter, it was having some issues with them.
Brokerages:
- According to Truist Securities, Nvidia's Blackwell line modifications had little effect on the company, and the company's quarterly results confirmed its leadership in artificial intelligence. The brokerage highlighted a "flurry of new products" that indicated broader strength in addition to consistent, significant growth in Nvidia's core data centre division. Truist kept a Buy recommendation on Nvidia and increased its price target from $145 to $148, advising investors to "look through the fog."
- According to Jefferies, there was still significant demand for Nvidia's current series of high-end AI processors, Hopper, and expectations for the company's profitability had increased significantly prior to the release of the earnings. Although the company's current-quarter outlook was strong, Jefferies felt that it was insufficient. However, the firm stated that concerns about the highly anticipated Blackwell line experiencing major delays had subsided and that the line would still likely contribute to the Hopper line's already substantial earnings. Jefferies kept a Buy recommendation on Nvidia, with a price target of $150.
- Wolfe Research acknowledged that Nvidia's growth trajectory was slowing, but the firm maintained a bullish outlook on the company, citing predictions of robust revenue growth with the eventual debut of the Blackwell line. However, the firm did point out that Nvidia's future revenues depended on a "successful and timely" rollout of the new range. Nonetheless, Wolfe kept its PT of $150 and an Outperform rating on Nvidia.
(Sources: investing.com, reuters.com)
