Nvidia (NVDA 1.56%) stock is falling Thursday following the release of the company's second-quarter earnings results. The artificial intelligence (AI) leader's share price was down 3.2% as of 10:15 a.m. ET, according to data from S&P Global Market Intelligence.
NASDAQ: NVDA
Key Data Points
Nvidia published Q2 results after the market closed yesterday and delivered results that were significantly better than most targets on Wall Street. The company also issued guidance for the third quarter that beat the average analyst estimate. But expectations were sky-high heading into the report, and comments from the investor conference call suggested that investors may have to wait longer for the semiconductor specialist's next-generation Blackwell processors.
Nvidia stock is slipping despite great Q2 results
Nvidia recorded non-GAAP (adjusted) earnings of $0.68 per share on revenue of $30 billion in the second quarter of its current fiscal year, which ended July 28. Meanwhile, the average analyst estimate had called for the business to post adjusted earnings of $0.64 on revenue of $28.7 billion. The company's sales were up 122% year over year in the period, and adjusted earnings per share were up 152% compared to the prior-year period.
It was a fantastic quarter for the business, with AI-related demand spurring another round of big growth from data center customers. Segment revenue surged 154% higher year over year, and high selling prices for graphics processing units (GPUs) and accelerators in the category helped the business post an adjusted gross margin of 75.7%. That was down a bit from the 78.9% margin it posted in fiscal Q1, but it still beat the company's 75.5% target margin and signaled that Nvidia's pricing power on its most advanced hardware remains very strong.
Strong Q3 guidance isn't overshadowing concerns about Blackwell delays
For the third quarter, Nvidia guided for revenue of $32.5 billion -- a target that came in ahead of the average Wall Street estimate's call for sales of $31.7 billion in the period. The company also guided for an adjusted gross margin of 75%. While this suggests that gross margin will decline on a sequential quarterly basis, the drop-off here looks very small and should actually be easing pricing-power concerns.
But despite strong second-quarter results and guidance for Q3, investors are focusing on some uncertainty surrounding the launch of Nvidia's Blackwell processors. The company said that the production of its next-generation chip platform will ramp up in this year's fourth quarter, which suggests that the new processors may miss their initially announced 2024 release window and slip into 2025.
The possibility of Blackwell being delayed due to a design flaw had already been widely reported prior to Nvidia's earnings report, so the potential for the release being pushed into next year isn't shocking. But expectations were so high heading into the report that investors seem to be focusing on the implication of a relatively short delay over signs that the business is otherwise firing on all cylinders.
