The graphics giant posted a 56 per cent jump in quarterly revenue to $46.74 billion, comfortably ahead of the $46.06 billion analysts had been hoping for. Net income surged to $26.42 billion from $16.6 billion, as adjusted earnings hit $1.05 per share, beating the $1.01 forecast.
Yet despite the bonanza, Nvidia shares slid nearly three per cent in after-hours trading. The culprit appears to be another underwhelming showing from its data centre business, which came in at $41.1 billion and fell slightly short of the StreetAccount estimate of $41.34 billion. That marks the second straight quarter the division has disappointed analysts.
Nvidia’s finance chief Colette Kress told analysts the company still expects “between $3 and $4 trillion in AI infrastructure spending by the end of the decade,” but the pace is clearly wobbling.
Large cloud providers are chucking tens of billions at AI infrastructure every few months, but Nvidia’s own sales are now showing signs of tapering. This was the slowest growth in nine quarters, even as revenue held above the 50 per cent mark year-on-year.
Meta, Alphabet, Amazon and Microsoft have all rolled out their earnings, and Nvidia had been expected to ride the same AI gravy train. But geopolitical headaches are throwing sand in the gears.
Nvidia confirmed it sold no H20 chips to China during the quarter, after regulatory red tape torpedoed a launch that had already cost the company $4.5 billion in writedowns.
The chip was built to comply with US export rules, but that didn’t stop it getting caught in the crossfire. If the processor had been available, Nvidia reckons it could have added $8 billion in second-quarter revenue.
Instead, Kress said $180 million in H20 inventory was released to a customer outside China. She added that if the situation improves, H20 shipments could bring in between $2 billion and $5 billion in the current quarter.
For now, Nvidia’s third-quarter forecast sits at $54 billion, give or take two per cent, again higher than analysts’ $53.1 billion estimate. That guidance still excludes any contribution from H20 sales in China.
Kress said $33.8 billion of the data centre haul came from GPU compute, which actually slipped a per cent from the previous quarter thanks to the H20 freeze. Another $7.3 billion came from networking gear needed to lash these high-end GPUs together, a figure that nearly doubled from last year.
Gaming made a solid comeback, with $4.3 billion in revenue, up 49 per cent. Before AI ate the world, this used to be Nvidia’s bread and butter. The company said it’s now tuning gaming GPUs to run OpenAI models locally on PCs, presumably so gamers can chat with Skynet between rounds of Fortnite.
The robotics unit, which Nvidia insists is a “growth opportunity,” pulled in $586 million, a tidy 69 per cent jump but still small beer compared to the data centre juggernaut.
Nvidia’s board approved a fresh $60 billion for share buybacks with no expiry. The company splashed $9.7 billion on its own stock this quarter alone, which might help prop things up if the market throws another wobbly.