Nvidia founder, President, and CEO Jen-Hsun Huang led the charge as the company’s shares soared 8% in after-hours trading on Wednesday. The chipmaker exceeded expectations for the second quarter and provided an optimistic outlook for the current period.
In terms of earnings, Nvidia reported adjusted earnings of $2.70 per share, surpassing the estimated $2.09 per share projected by Refinitiv. The company’s revenue also outperformed expectations, reaching $13.51 billion compared to the estimated $11.22 billion.
Looking ahead, Nvidia anticipates third-quarter revenue of approximately $16 billion, higher than the Refinitiv forecast of $12.61 billion. This guidance implies a remarkable 170% growth in sales year-on-year for the current quarter.
Net income experienced a significant jump, reaching $6.19 billion, or $2.48 per share, compared to $656 million, or 26 cents per share, during the same period last year.
The robust sales and promising forecast highlight Nvidia’s pivotal role in the generative AI boom. The company’s A100 and H100 AI chips are crucial for building and operating AI applications like OpenAI’s ChatGPT, enabling conversational responses and image generation from simple text queries.
Second-quarter revenue doubled from $6.7 billion year-on-year and increased by an impressive 88% from the previous period.
Nvidia CEO Jensen Huang expressed his enthusiasm, stating, “A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”
Even before the release of this report, Nvidia’s stock price had already tripled this year, making it the leading performer in the S&P 500 index. After hours, the stock exceeded $507, potentially setting a new record if it maintains the same level upon Thursday’s closing. The previous record was $474.94 on July 18.
The outstanding performance of Nvidia was primarily driven by its data center business, which includes AI chips. Major cloud service providers and prominent consumer internet companies, such as Alphabet, Amazon, and Meta, aggressively adopted the company’s next-generation processors. Nvidia’s data center group achieved $10.32 billion in revenue, a remarkable 171% growth year-on-year, significantly surpassing the StreetAccount estimate of $8.03 billion.
Additionally, Nvidia recorded an impressive increase in adjusted gross margin, rising by 25.3 percentage points to 71.2%. This spike was primarily attributed to the substantial growth in data center sales, which yielded higher profitability.
Although Nvidia’s gaming division, which was previously its core business, witnessed a 22% revenue increase from the previous year, reaching $2.49 billion, the high-end graphics application segment experienced a 24% decline, resulting in $379 million in revenue. The automotive revenue, on the other hand, grew by 15% year-on-year, totaling $253 million.
The board of directors at Nvidia authorized $25 billion in share buybacks and executed $3.28 billion worth of share repurchases during the quarter.
Nvidia executives will further elaborate on these impressive results and developments during a conference call with analysts at 5 p.m. ET.
In conclusion, Nvidia’s remarkable performance and continuous advancements in the field of data centers, generative AI, and gaming have solidified its position as a leading player in the industry. The company’s ability to consistently exceed expectations and provide optimistic guidance showcases its strength and potential for future growth.
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