Nvidia’s quarterly revenue has more than doubled, with the chipmaker forecasting third-quarter revenue above Wall Street estimates, signalling that demand for its AI chips has continued unabated.
Its shares, however, slipped -1% in after-market trading as the results did little to ease investor concerns about the AI spending cycle that has powered Nvidia’s meteoric rise.
The company’s gross margin outlook for the current quarter also slipped.
As of Wednesday’s close in the US, Nvidia has gained just +12.4% so far this year.
Results from Nvidia, one of the world’s most valuable firms, are considered a bellwether for the AI market as its chips power most of the major data centres and advanced AI models globally.
The report comes weeks after companies including Microsoft and Meta, two of Nvidia’s biggest customers, reinforced expectations that big tech would spend more than $US730 billion on AI infrastructure this year, an unprecedented sum that marks a big step up from last year’s $US400 billion outlay.
An increasing share of tech companies’ slated spending is now, however, going towards in-house chip efforts that aim to reduce their reliance on Nvidia’s costly and supply-constrained processors.
Scrutiny has also mounted of Nvidia’s role in the AI boom’s complex financing ecosystem after it agreed to guarantee some deals under a new tie-up with six major financial institutions that aims to raise more than $US500 billion for AI infrastructure.
The company’s margins are closely watched as analysts expect them to be pressured by the production ramp for its Rubin chips and higher memory prices plaguing the silicon supply chain.
Nvidia expects adjusted gross margin to be 74%, plus or minus 50 basis points, for the third quarter. Analysts were expecting 74.77%.
The company forecast third-quarter revenue of $US108 billion, plus or minus 2%, compared with analysts’ average estimate of $US104.19 billion.
Nvidia said it did not assume any data centre chip sales from China in its outlook.
Its business with China has been highly uncertain. In May, Washington cleared 10 Chinese firms, including Alibaba, Tencent and ByteDance, to buy one of Nvidia’s most powerful AI chips, the H200, though deliveries stalled for months.
As AI is increasingly used to automate tasks and answer queries, Nvidia’s graphics processors face growing competition from central processors and custom chips that are better suited to handle that process, known as inference.
The shift has prompted major technology companies to invest in their own silicon.
Meta plans to begin manufacturing its in-house “Iris” AI chip in September, part of a four-generation custom silicon project designed to lower computing costs.
Here is a look at Nvidia’s stock market movement across the trading day:
– Reporting with Reuters
