Nvidia delivered a stronger-than-expected fiscal second quarter, with revenue and earnings both exceeding Wall Street projections in results released Wednesday after the closing bell.
Quarterly revenue reached $96.2 billion, beating the consensus estimate of $92.27 billion. Data-center sales came in at $89 billion, above expectations of $85.4 billion, while earnings per share stood at $2.22, compared with analysts’ forecast of $2.09.
Nvidia stock rose about 4% in after-hours trading following the announcement. Bitcoin continued to move within a narrow range, trading slightly above $78,000.
CEO Jensen Huang said the AI industry has reached an important turning point, with growing demand for computing capacity increasingly translating into revenue for Nvidia.
For the fiscal third quarter, Nvidia expects revenue of $108 billion, exceeding the $103.9 billion Wall Street projection. A quarterly revenue figure above $100 billion would place Nvidia among a small group of S&P 500 companies that have reached that milestone.
The company’s margin outlook was less impressive. Nvidia expects gross margin to fall to 74% next quarter, compared with 75% in the second quarter. The weaker margin forecast may have limited the stock’s initial response to the earnings release.
Thomas Monteiro, senior analyst at Investing.com, said Nvidia is facing rising pressure on profitability as expenses for memory, financing and infrastructure increase.
Monteiro pointed out that the projected 74% gross margin would represent the first sequential decline of the current cycle. Higher memory prices could further challenge Nvidia’s ability to keep margins around the mid-70% range.
He also noted that Nvidia may find it increasingly difficult to pass all higher costs to customers because major technology companies are facing their own increases in spending and financing costs.
Monteiro said the quarter was excellent by most measures but argued that it could lead investors to reconsider Nvidia’s medium-term outlook.
He added that the long-term AI growth story remains strong. The key issue, however, is how much of that expansion Nvidia can ultimately convert into higher margins and cash flow.
During the earnings call, Huang discussed the supply constraints and rising costs affecting the company.
He said Nvidia is working with memory suppliers and securing additional capacity for power, land and data-center infrastructure as demand continues to outstrip supply.
Huang also highlighted a price increase planned for the first quarter. He said customers can generate substantial returns from Nvidia’s systems, potentially giving the company additional flexibility to pass some of its rising costs on to buyers.
