Nvidia shares edged down in after-hours on Wednesday and remained lower in pre-market trading on Thursday, following the release of quarterly results. While earnings were strong, markets remained unconvinced.
For the fiscal second quarter, Nvidia reported revenue of USD 46.7 billion, a 56% increase year-on-year, and earnings per share of USD 1.05, both slightly ahead of consensus expectations. However, revenue growth continued to slow, down from 69% in the previous quarter and a peak of 265% in 2024.
The company also announced a USD 60 billion share repurchase program, underscoring management’s long-term confidence. However, despite beating estimates, the data center division came in marginally below forecasts at USD 41.1 billion, which weighed on investor sentiment.
Looking forward, Nvidia projected Q3 revenue of USD 54 billion, matching consensus but disappointing some investors who had hoped for a significantly higher figure. The wide dispersion in estimates reflects the current uncertainty around near-term AI monetization and geopolitical headwinds, particularly in China.
Indeed, Nvidia recorded no H20 chip sales to Chinese customers in Q2, representing a USD 4 billion shortfall. The outlook for Q3 also excluded those sales, though the company sees a potential upside if licensing approvals accelerate, while the company mentioned that any request for a percentage of the revenue by the US government could lead to litigation.
CEO Jensen Huang remained upbeat on the broader outlook, forecasting USD 3-4 trillion in global AI infrastructure spending by decade’s end and reaffirming that demand from hyperscalers remains robust. However, the concentration of Nvidia’s client base continues to be flagged as a structural risk.
Looking ahead, the market may remain sensitive to execution risk and external variables. Any new signs of a slowdown in AI demand could affect the company, the tech sector, and stock markets as a whole.
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