Nvidia shares slump despite company’s record-breaking revenue
Nvidia shares are down over eight per cent in after hours trading even after it smashed its forecasts and posted record revenue.
Revenue for the second quarter hit a new record of $30bn (£22.7bn), up 15 per cent from the first quarter and up 122 per cent from the previous year ago.
Nvidia also posted record quarterly data centre revenue of $26.3bn (£19.9bn), up 154 per cent from a year ago, and announced a $50bn share buyback.
Chief executive Jensen Huang said: “Nvidia achieved record revenues as global data centres are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.”
Huang added that the anticipation for Blackwell, a new chip, is “incredible.” In June, Nvidia surprised the market by revealing a new microchip called Rubin set for production in 2026 and a Blackwell Ultra chip for 2025, which will start contributing to revenue in the fourth quarter.
Matt Britzman, senior equity analyst at Hargreaves Lansdown said: “Aside from simply not beating by a large enough margin, the other bit of weakness was the warning that Blackwell launch costs would weigh on fourth-quarter margins – but we’re splitting hairs really.”
In its first quarter this year, Nvidia’s revenue surged 262 per cent surge, driven by unprecedented sales of its s graphics processing units (GPUs), essential for powering artificial intelligence applications. It forecasted revenue of $28bn for the fiscal second quarter.
Analysts expected sales to be $28.8bn (£21.8bn), with guidance for the next quarter of $31.8bn (£24bn). They projected operating profit to more than double to $18.7bn (£14.1bn).
Ben Barringer, technology and media analyst at Quilter Cheviot, put the sell-off down to “a lot of nervousness” among investors who have become accustomed to even better numbers recently.
“Nvidia has grown to a point where there is little room for error and any sign of slowing or normalisation of growth will have an outsized effect on the share price.
“This being the smallest beat in six quarters, and the fact guidance for gross margins and costs are weaker was enough to get people to hit the sell button in afterhours trading,” he explained.
Nvidia has almost recovered from the 25 per cent drop in its share price that occurred during the stock sell-off in July, when fears of a US recession and doubts over AI-linked firms rattled global markets.
The company’s stock price is approaching its all-time high of $135.58, having climbed 170 per cent over the past year.
Tech giants Google, Microsoft, Meta, Amazon, and OpenAI, have collectively invested billions in advanced and high-value chips from Nvidia and its rivals, such as AMD and Intel.