Nvidia Has Once Again Broken Revenue and Profit Records, But Even That Wasn’t Enough to Satisfy the Market

Nvidia has just released its latest quarterly results, which are more significant than ever because they’re considered the canary in the coal mine for the technology industry. Is there still room for vertical growth for the AI giant?

The answer is yes, but there are some nuances.

Why this matters. Nvidia’s performance is a key barometer for the AI boom and has been a major driver of the stock market rally this year. The company’s results are a key indicator of demand for AI technology.

Key figures:

• Quarterly revenue: $30.04 billion, up 122% from the previous year and exceeding market expectations.
• Earnings per share: $0.68, surpassing the forecast of $0.65.
• Next quarter forecast: $32.5 billion, higher than anticipated.
• Net income: $16.599 billion, marking a 168% growth.
• Gross margin: 75.1%, slightly lower than the expected 75.5%.

Read that again. The gross margin figure is particularly noteworthy and indicates the company’s strong performance.

Nvidia continues to benefit from the high expectations for AI among the tech giants, who are its largest customers by volume.

The good news that wasn’t. Despite beating expectations, Nvidia’s shares are down nearly 7% after the market closed, proving that even outstanding results can disappoint investors due to market dynamics. That’s how the market works, my friend.

The drop reflects that the market was expecting even more from the company, especially on the revenue forecast. In fact, some analysts were targeting the range of $33 billion to $34 billion in revenue for the next quarter.

What’s next:

• Nvidia has announced a $50 billion share buyback program.
• The company has confirmed the launch of its Blackwell chip for the fourth fiscal quarter. However, it’s shaping up to be a bumpy launch.
• Investors are keeping an eye on that launch and its subsequent adoption, as well as possible signs of a slowdown in AI spending.

CEO Jensen Huang stated that the demand for AI continues to accelerate. However, a slight drop in gross margin and a forecast below expectations have made some investors cautious.

A broader perspective. Nvidia’s valuation has increased ninefold since the end of 2022, surpassing $3 billion. There are only two other companies in the world above that mark: Microsoft and Apple. Moreover, Nvidia achieved this with far fewer employees. However, being part of this exclusive club allows little room for disappointment, regardless of its size.

Nvidia remains the leader of the AI revolution and will be for some time. Nevertheless, the intense demands of the market require attention to every detail to maintain the pace of its stock growth.

Image | Jose G. Ortega Castro

Related | Nvidia Has Just Surpassed Apple as the World’s Second Most Valuable Company