Shares of Nvidia (NVDA -1.15%) are up 8.1% in after-hours trading on Wednesday as of 5:36 p.m. ET following the graphics chip specialist's release of its report for the second quarter of fiscal 2024 (ended July 30).
The stock's surge is attributable to the quarter's revenue and earnings crushing Wall Street's consensus estimates and management's Q3 guidance for both the top and bottom lines also demolishing analysts' expectations.
Nvidia's key numbers
| Metric | Fiscal Q2 2023 | Fiscal Q2 2024 | Change |
|---|---|---|---|
| Revenue | $6.70 billion | $13.51 billion | 101% |
| GAAP operating income | $499 million | $6.80 billion | 1,263% |
| GAAP net income | $656 million | $6.19 billion | 843% |
| Adjusted net income | $1.29 billion | $6.74 billion | 422% |
| GAAP earnings per share (EPS) | $0.26 | $2.48 | 854% |
| Adjusted EPS | $0.51 | $2.70 | 429% |
Data source: Nvidia. GAAP = generally accepted accounting principles. Fiscal Q2 2024 ended on July 30, 2023.
Investors should focus on the adjusted numbers, as they exclude one-time items.
Revenue was also up 88% from Q1, which is mighty sequential growth, especially for a company of Nvidia's size.
Wall Street was looking for adjusted earnings per share (EPS) of $2.09 on revenue of $11.22 billion, so Nvidia left both expectations in the dust.
Platform performance
| Platform | Fiscal Q2 2024 Revenue | Change YOY | Change QOQ |
|---|---|---|---|
| Data center | $10.32 billion | 171% | 141% |
| Gaming | $2.49 billion | 22% | 11% |
| Professional visualization | $379 million | (24%) | 28% |
| Automotive | $253 million | 15% | (15%) |
| OEM and other | $66 million | (53%) | (14%) |
| Total | $13.51 billion | 101% | 88% |
Data source: Nvidia. OEM = original equipment manufacturers; OEM and other is not a target-market platform. YOY = year over year. QOQ = quarter over quarter.
As with last quarter, the artificial intelligence (AI)-driven data-center platform's revenue set another quarterly record high. This platform accounted for 76% of the company's total quarterly revenue, so its results are driving overall results.
Within the data-center platform, compute and networking revenue surged 195% and 94%, respectively, from the year-ago period. In her CFO commentary, Colette Kress said that the platform's growth was
led by cloud service providers and large consumer internet companies. Strong demand for the NVIDIA HGX platform based on our Hopper and Ampere GPU [graphics processing unit] architectures was primarily driven by the development of large language models and generative AI.
Gaming-revenue growth was driven by sales of the company's GeForce RTX 40 series GPUs based on its new Ada Lovelace architecture.
What the CEO had to say
Here's what co-founder and CEO Jensen Huang had to say in the earnings release:
A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI. NVIDIA GPUs connected by our Mellanox networking and switch technologies and running our CUDA AI software stack make up the computing infrastructure of generative AI.
During the quarter, major cloud service providers announced massive NVIDIA H100 AI infrastructures. Leading enterprise IT system and software providers announced partnerships to bring NVIDIA AI to every industry. The race is on to adopt generative AI.
Generative AI exploded onto the scene late last year with the release and surge in popularity of OpenAI's ChatGPT. According to Nvidia's glossary of terms, "generative AI enables users to quickly generate new content based on a variety of inputs. Inputs and outputs to these models can include text, images, sounds, animation, 3D models, or other types of data."
Third-quarter guidance
For the fiscal third quarter, management expects revenue of $16.0 billion, which equates to growth of 170% year over year. It also guided (albeit indirectly by providing a bunch of inputs) for adjusted EPS of $3.32, or 472% growth.
Going into the report, Wall Street had been modeling for Q3 adjusted EPS of $2.39 on revenue of $12.61 billion, so the company's outlook crushed both estimates.
Another powerful quarter
I'll reiterate what I wrote after last quarter's earnings release:
Nvidia already had many long-term avenues for growth (such as cloud computing, non-generative AI, gaming, autonomous vehicles, and the metaverse) before generative AI arrived recently on the scene. Generative AI should significantly rev up Nvidia's long-term growth potential.
