By Max A. Cherney, Arsheeya Bajwa, Stephen Nellis
(Reuters) – Nvidia forecast its slowest revenue growth in seven quarters on Wednesday, failing to meet the high expectations of some investors for what has become the world’s most valuable company.
Shares of the Santa Clara, California-based company fell 5% after posting results but quickly pared losses to trade down 1.5% after hours. During the regular session it closed 0.8% lower.
Expectations were higher than the results, with Nvidia showing more than 20% over the past two months and hitting an intraday record high on Monday. The stock has nearly quadrupled so far this year and has risen more than ninefold in the past two years.
Nvidia is in the middle of launching the Blackwell family of powerful artificial intelligence chips, which will weigh on the company’s gross profit initially but slowly over time.
The new line of processors has been embraced by Nvidia customers and the company will exceed initial projections of several billion dollars in processor sales in the fourth quarter, chief financial officer Colette Kress told analysts on a conference call Wednesday.
Asked about media reports that the flagship liquid-cooled server containing the new 72 chips had overheating problems during initial tests, Chief Executive Jensen Huang said there were no problems and that customers such as Microsoft, Oracle and CoreWeave were adopting the system.
“There is no problem with Grace Blackwell’s liquid cooling system,” Huang told Reuters. “Engineering is not easy, because what we do is difficult, but we are good at it.”
Initially the new line of chips will bring gross profit in the low 70% range, but it will increase to the mid 70% range when production ramps up, said Kress.
The company forecast revenue of $37.5 billion, plus or minus 2% for the fourth quarter, compared to analysts’ average of $37.09 billion according to data compiled by LSEG.
Still an amazing level of growth thanks to the huge demand for company chips that make the brain of complex generative AI systems, it marks a clear slowdown from the previous quarter when Nvidia usually posted sales that doubled at least.
“The age of AI is in full steam, driving a global shift to NVIDIA computing,” Huang said in an earnings release. “The demand for Hopper and the anticipation for Blackwell – in full production – is incredible because of the scale pretraining, post-training and inference of the foundational modeler,” he said, referring to the two high-performance AI chips.
