IMPORTANT POINTS:
- Nvidia reports an 88% increase in revenue and exceeds expectations for the second quarter.
- Booming demand for AI chips, particularly the A100 and H100 models, fuels Nvidia’s growth.
- Nvidia’s data center business grew 171% annually, with revenue of $10.32 billion.
Nvidia (NVDA) has witnessed spectacular growth. The company’s shares were up 8% after the market closed on Wednesday. This boom comes after the chipmaker beat estimates for the second quarter and gave an upbeat outlook for the next period.
Featured Results
- Earnings: $2.70 per share (adjusted) vs. $2.09 Refinitiv expected.
- Revenue: $13.51 billion vs. $11.22 billion forecast by Refinitiv.
Nvidia has said it expects third-quarter revenue of about $16 billion, up from the $12.61 billion forecast by Refinitiv. Additionally, this guidance from Nvidia indicates sales growth of 170% per year for the current quarter.
The company posted a jump in net income, reaching $6.19 billion, or $2.48 per share, from $656 million, or 26 cents, a year earlier.
However, financial performance is not the only story. Nvidia’s central role in the generative AI explosion is undeniable. Its A100 and H100 AI chips are essential for building and running AI applications like ChatGPT, and demand is booming.
“A new era of computing has begun. Companies around the world are moving from general purpose computing to accelerated computing and generative AI.”Jensen Huang, CEO.
Even before Wednesday’s report, Nvidia’s share price had more than tripled for the year, making it the best performer in the S&P 500. The share price topped $507 after the market closed, a level that would mark a Record if it closes there on Thursday. Its previous highest close was $474.94 on July 18.
Nvidia’s impressive performance was driven by its data center business. Nvidia reported $10.32 billion in data center revenue, up 171% year-over-year.
On the other hand, Nvidia’s now smaller gaming business also grew, rising 22% annually to $2.49 billion.
Here’s how Nvidia’s two biggest business lines performed against expectations:
- Gaming: $2.49 billion, vs. $2.38 billion expected according to StreetAccount.
- Data centers: $10.32 billion, versus $8.03 billion expected, according to StreetAccount.
In addition, Nvidia also produces chips for high-end graphics applications. However, this business reduced by 24% year-on-year, reaching 379 million dollars. It also reported $253 million in auto revenue, growing 15% year-over-year.
To cap it all off, Nvidia announced that its board of directors has authorized $25 billion in share repurchases. Executives will discuss these results in a call with analysts at 5 pm ET.
