Nvidia smashed Wall Street expectations, again
Soaring demand for AI-powering processors saw group revenue hit $13.51 billion, ahead of forecasts that were only upgraded a matter of months ago.
Wall Street had pencilled in expectations of some $11.22 billion of revenue ahead of the results, and that was at the top end of Nvidia’s own guidance.
It posted earnings of $2.70 per share, comfortably beating forecasts for $2.08.
Nvidia’s data centre unit, which makes semiconductors for cloud computing devices and AI applications, delivered $10.32 billion of revenue, some $3 billion more than the market had anticipated.
Such is the rapid growth that Nvidia again upgraded its outlook, setting revenue guidance for the current quarter to $16 billion, up from $12.6 billion.
As ever, demand for Nvidia’s A100 and H100 artificial intelligence (AI) chips also played a crucial role.
“A new computing era has begun,” CEO Jensen Huang said in the press release. “Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”
Read more: Nvidia smashed Wall Street expectations, again
Nvidia’s supersized dividends
Nvidia’s balance sheet is stuffed to the gills with dollar bills, even after giving back $3.38 billion to shareholders in the second quarter through buybacks.
Nvidia’s solution? The board approved an additional $25 billion share repurchase programme, without expiration, starting from now.
Nvidia was hardly under pressure to return even more value to shareholders; stock is already up more than threefold year to date, or nearly sevenfold in the past five years.
This suggests that Nvidia chief Jensen Huang sees no prospect of a major acquisition in the near future.
For the record, $25 billion worth of buybacks is two-thirds the price of Huang’s bid to buy British semiconductor architect Arm Holdings for $40 billion.
Read more: Nvidia’s AI-generated share buybacks an eyecatcher by any standard
Biggest semiconductor revenue beat of all time
Analyst commentary on Nvidia’s stunning second-quarter revenue beat came in thick and fast, with major investment banks roundly applauding the chipmaker’s blockbuster results.
Deutsche Bank, UBS, Wedbush, and Morgan Stanley (NYSE:MS) were undeniably enchanted by the huge beat on Wall Street expectations, with Morgan Stanley (NYSE:MS) noting that last quarter was the first in history that a semiconductor firm guided revenues $4 billion above consensus.
Morgan Stanley (NYSE:MS) praised Nvidia's strong data centre business growth and highlighted the company's robust product pipeline.
Wedbush described Nvidia's guidance as a ”historical moment for the broader tech sector and a sneak preview of what is on the horizon”, comparing the AI demand surge to significant tech trends of the past, such as the rise of the internet in 1995 and Apple's iPhone launch in 2007.
“Nvidia delivers guidance for the ages; the 1995 moment is here,” analysts gushed.
UBS noted that while Nvidia's guidance wasn't as surprising as the previous quarter, it was still robust.
The bank emphasised Nvidia's pivotal role in AI, suggesting that the company could potentially see demand in the $30 billion per quarter range.
Ross Seymore at Deutsche Bank got creative with his praise, calling the results “another whopper from hopper”, referring to Nvidia’s H100 hopper GPU architecture that is designed to accelerate the training of AI models.
Morningstar analyst Brian Colello said the firm is “much more optimistic about the rise of AI workloads and how Nvidia’s wide moat should cement itself as an AI chip leader”.
Colello estimated $100 billion in revenues by 2028, stating: “We could be wrong, but we see little evidence that these GPU orders are upfront spending or a one-time build… Such growth might be unprecedented in large-cap tech, but we foresee all types of enterprises investing in AI.”