It’s hard to be the king of AI.
Nvidia signaled that demand for AI remains strong, more than doubling its revenue from the same period last year and forecasting revenue of $32.5 billion in the next quarter.
But that didn’t come as a surprise to industry experts on Wednesday.
The multi-trillion-dollar company had been widely expected to report strong quarterly results as big tech companies continue to pour billions of dollars into artificial intelligence, locking in demand for Nvidia’s prized chips.
And by standard standards, it did.
The company reported revenue of $30.04 billion for the quarter, more than double the figure from the same period last year and beating analyst expectations of $28.86 billion.
However, the company’s shares fell 6.9% after the close of trading on Wednesday following the earnings release.
Working against Nvidia, analysts and industry experts told Business Insider, are the sky-high expectations investors have always placed on the Silicon Valley chipmaker, especially as they worry about returns on their AI investments.
“The numbers are great,” eMarketer analyst Jacob Born told Business Insider. “The problem is that investors continue to raise their expectations for Nvidia quarter after quarter, and those expectations are becoming unrealistic.”
Emarketer is a subsidiary of Axel Springer, which also owns Business Insider.
Similarly, Daniel Neumann, CEO of technology research firm Futurum Group, told BI that while Nvidia’s second-quarter numbers were strong, “that level of strength was already priced in by investors,” describing expectations as “almost irrational exuberance.”
Guidance for the current quarter also failed to impress some investors.
Nvidia forecast third-quarter revenue of about $32.5 billion, below investor expectations of closer to $33 billion.
Analysts at Jefferies rated the revenue outlook as “good but not good enough” in a report on Wednesday.
Chip Delay
Questions also emerged ahead of Wednesday’s earnings report over concerns surrounding delayed shipments of the company’s Blackwell GPUs, which are expected to replace Nvidia’s Hopper.
“Recent delays in Blackwell’s market release schedule have increased investor anxiety,” Born told BI.
During an earnings call on Wednesday, Nvidia CEO Jensen Huang promised that the company would ship billions of dollars’ worth of Blackwell GPUs by the fourth quarter, but analysts warned that the metric was vague. Despite follow-up questions from investors, Nvidia executives on the call remained vague about the profits the company expected from Blackwell.
Overall, experts say Nvidia has largely allayed concerns about Blackwell’s shipping delays, but whether shipments are delayed is crucial for the company.
Nvidia’s profits “beat expectations, which rose sharply at the time of the announcement, but the key takeaway is that Blackwell’s delays are now a thing of the past,” Jefferies analysts wrote.
Logan Park, a technology analyst at Edward Jones, wrote that it may be hard for Nvidia to significantly beat expectations.
“But the company should gain momentum with the launch of its new Blackwell chips later this year,” he wrote.
Emma Cosgrove contributed to this report.