Nvidia (NASDAQ: NVDA) The stock fell on Friday after the release of the company’s second quarter earnings results. The artificial intelligence (AI) leader’s stock price was down 3.2% at 10:15 a.m. ET, according to data from S&P Global Market Intelligence.
Nvidia released its Q2 results after the market closed yesterday and delivered results that beat most Wall Street targets. 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 should wait longer for the next-generation semiconductor specialist Blackwell processor.
Nvidia stock falls despite good Q2 results
Nvidia reported non-GAAP (adjusted) earnings of $0.68 per share on revenue of $30 billion in the second quarter of the current fiscal year, which ended on July 28. in revenue of $ 28.7 billion. The company’s sales rose 122% year-over-year during the period, and adjusted earnings per share were up 152% compared to the year-ago period.
It was an excellent quarter for the business, with AI-related demand spurring another round of big growth from data center customers. Segment revenue grew 154% higher year-over-year, and high selling prices for graphics processing units (GPUs) and accelerators in the category helped the business achieve a 75.7% gross margin. That’s down slightly from the 78.9% margin it posted in fiscal Q1, but still beats the company’s 75.5% target and signals that Nvidia’s pricing power in cutting-edge hardware remains strong.
The strong Q3 guidance did not address concerns about Blackwell’s delays
For the third quarter, Nvidia guided for revenue of $32.5 billion — a target that was ahead of Wall Street’s average estimate 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 profit will decline sequentially each month, the decline here appears to be very small and should reduce pricing power.
But despite second-quarter results and guidance for Q3, investors are focused on some uncertainty surrounding the launch of Nvidia’s Blackwell processor. The company said production of its next-generation chip platform will ramp up in the fourth quarter of this year, suggesting that new processors may miss the announced 2024 release window and enter 2025.
The possibility of Blackwell being delayed due to design flaws has been widely reported ahead of Nvidia’s earnings report, so the potential for its release to be pushed to next year is not surprising. But expectations were so high heading into the report that investors seem to focus on the implications of the relatively short delay over signs that business is otherwise firing on all cylinders.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has a position and recommends Nvidia. The Motley Fool has a disclosure policy.
Why Nvidia Stock Is Falling Today was originally published by The Motley Fool
