Nvidia Reports Record Q2 Earnings, Stock Dips Despite Strong Performance

TLDR:

• Nvidia reported Q2 revenue of $30 billion, up 122% year-over-year
• Data center business drove growth, bringing in $26.3 billion (154% YoY increase)
• Q3 revenue guidance of $32.5 billion exceeded analyst estimates
• Nvidia announced a $50 billion increase in share buyback authorization
• Despite strong results, Nvidia stock fell 5-7% in after-hours trading

Nvidia, the leading AI chip manufacturer, has announced its fiscal second-quarter earnings, revealing record-breaking revenue and surpassing Wall Street expectations.

The company reported a staggering $30 billion in revenue for the quarter, marking a 122% increase compared to the same period last year.

This impressive growth was primarily driven by Nvidia’s data center business, which generated $26.3 billion in revenue, representing a 154% year-over-year increase.

The company’s adjusted earnings per share came in at $0.68, significantly higher than analyst projections. Nvidia’s gaming division, once its main revenue source, also showed positive growth with $2.8 billion in revenue, up 16% from the previous year.

Looking ahead, Nvidia provided an optimistic forecast for the third quarter, projecting revenue of $32.5 billion. This guidance slightly exceeded analyst expectations of $31.9 billion, further demonstrating the company’s confidence in its continued growth trajectory.

Nvidia CEO Jensen Huang expressed enthusiasm about the company’s future, particularly regarding the upcoming Blackwell chip. “Anticipation for our next-generation Blackwell chip is incredible,” Huang stated.

CFO Colette Kress added that Blackwell production is scheduled to begin in the fourth quarter and continue into fiscal 2026, with expected shipments of “several billion dollars in Blackwell revenue” in Q4.

In a move that signaled confidence in its financial position, Nvidia announced a significant increase in its share buyback authorization. The company added $50 billion to the existing $7.5 billion remaining from its previous authorization, bringing the total to $57.5 billion.

Despite these strong results and positive outlook, Nvidia’s stock experienced a 5-7% dip in after-hours trading.

This reaction highlights the challenges faced by a company that has seen its stock price surge by 154% this year and over 3,000% in the past five years.

The market’s response suggests that even great numbers may no longer be sufficient to impress investors who have come to expect exceptional performance from the AI juggernaut.

Nvidia’s performance has broader implications for the market, given the company’s substantial 7% weighting in the S&P 500. As noted by Bespoke Investment Group, Nvidia’s “earnings report has become the world’s most important financial news event.”

While Nvidia continues to dominate the AI chip market, competitors are not standing idle. AMD recently acquired ZT Systems in a $4.9 billion deal, aiming to bolster its AI system server capabilities.

However, analysts believe Nvidia remains best positioned to benefit from the ongoing AI infrastructure spending cycle.

The company’s data center business, which now accounts for 87% of Nvidia’s total revenue, underscores the ongoing demand for AI infrastructure in the tech sector. Major tech companies continue to invest aggressively in AI, benefiting Nvidia’s bottom line even as they explore developing their own silicon solutions.

Looking ahead, Nvidia faces the challenge of maintaining its growth trajectory in a market with increasingly high expectations.

The company’s ability to execute on its Blackwell chip production and meet the growing demand for AI infrastructure will be crucial in the coming quarters.