Nvidia’s 122% revenue growth in the last quarter exceeded market expectations

Nvidia’s long-awaited quarterly report caused a not entirely proportional reaction from investors. The company’s revenue in the last quarter increased by 122% to $30 billion, exceeding expectations, the forecast for the current quarter also turned out to be higher than the level discussed by investors, but the issuer’s shares began to fall by almost 7% after the close of trading.

Image source: NVIDIA

As CNBC clarifies, in the last quarter Nvidia earned $30.04 billion against the expected $28.7 billion, and in the current quarter it expects to earn $32.5 billion instead of the $31.7 billion mentioned in the investors’ forecast. If Nvidia’s own expectations for the current quarter are justified, then the revenue will grow by 80% year-on-year. In the last quarter, the company’s revenue increased by 122% year-on-year, while over the previous three quarters it increased by more than 200%. In fact, the slowdown in revenue growth is the reason for the decline in the company’s stock price after the publication of the report.

The company’s net profit in the second quarter more than doubled to $16.6 billion year-on-year, operating profit increased by 174% to $18.6 billion, but operating expenses also increased by 48%. Nvidia’s profit margin fell sequentially from 78.4% to 75.1%, but grew five percentage points year over year. For the full year, the company expects to maintain its profit margin at the level of 74 to 76%, while analysts expect an average value of about 76.4%.

In early October, Nvidia will pay dividends at the rate of $0.01 per share, and it also announced the launch of a share repurchase program totaling $50 billion. Even such pleasant news for shareholders, we note, did not materialize into an increase in the issuer’s share price.

In the data center segment, which accounted for 87.6% of the company’s total revenue in the last quarter, Nvidia received $26.3 billion. Its revenue in this area increased by 154% year over year, exceeding analysts’ expectations. However, even in the server segment, Nvidia’s revenue was not uniform. Of this amount, approximately $3.7 billion came from revenue from the sale of telecommunications solutions, which is 114% more than the results of the same period last year. Cloud service providers accounted for 45% of Nvidia’s server revenue in the second quarter. Directly computing components for server use added 162% to $22.6 billion in revenue.

CFO Colette Kress emphasized that in the fourth fiscal quarter, which ends in January next year, the company will have time to earn several billion dollars from supplies of Blackwell generation accelerators. The company’s founder, Jensen Huang, admitted that it had to make “changes to the mask” to fix a design flaw and improve yield, but did not require functional changes. He added that when he said Blackwell started production of accelerators in the fourth quarter, he was talking about actual product shipments, not preparations for them. Nvidia representatives simultaneously admitted that demand for Hopper accelerators is growing in the current half of the year.

In the gaming sector, Nvidia’s revenue in the last quarter grew by 16% to $2.9 billion, exceeding market expectations by almost $200 million. Supply volumes of both gaming video cards for PCs and components for game consoles increased. Let us remind you that Nvidia supplies Nintendo Switch consoles with its chips. In the segment of solutions for professional visualization, the company’s revenue increased by 20% to $454 million. In the automotive segment, revenue increased immediately by 37% to $346 million. However, this amount also included funds received from the supply of components for robotic products.

In the current quarter, Nvidia expects to earn an average of about $32.5 billion and maintain a profit margin in the range of 74.4 to 75%, depending on the calculation methodology. Operating expenses in the third quarter should be $3.0 or $4.3 billion, depending on the calculation method; for the full year they will grow by more than 40%.