Despite high demand for next-generation chips, Nvidia's stock declines following earnings, with predictions exceeding estimates.

Despite high demand for next-generation chips, Nvidia's stock declines following earnings, with predictions exceeding estimates.



AI powerhouse Nvidia (NVDA) reported its second-quarter earnings after the bell on Wednesday, exceeding expectations on both revenue and earnings per share (EPS), while also delivering a strong forecast for the current quarter.




For its fiscal second quarter, Nvidia posted adjusted earnings per share of $0.68 on revenue of $30 billion, surpassing analysts' expectations of $0.64 EPS and $28.8 billion in revenue. This represents a 122% increase in revenue and a 168% rise in earnings compared to the same period last year.




Looking ahead, Nvidia provided third-quarter revenue guidance of $32.5 billion, plus or minus 2%, topping analysts' projections of $31.9 billion.




Despite the positive results, Nvidia's stock dropped about 3% in pre-market trading on Thursday and was down as much as 6% in immediate reaction to the report.




The bulk of Nvidia's revenue came from its data center business, which generated $26.3 billion during the quarter, beating Wall Street's estimate of $25 billion. This marks a 154% increase from the previous year, when the segment brought in $10.3 billion.




CEO Jensen Huang highlighted the "incredible" demand for the company’s upcoming Blackwell chip, while CFO Colette Kress added that Blackwell production is set to ramp up in the fourth quarter and continue into fiscal 2026. She also noted that Nvidia made changes to the Blackwell GPU to enhance production yield. Shipments of the current Hopper chips are expected to increase in the second half of the year.




Additionally, Nvidia announced a $50 billion increase in its share buyback program, with $7.5 billion remaining under the existing authorization as of the end of the quarter.




The company's gaming division, once its top revenue driver, reported $2.8 billion in sales, up 16% year over year.




As the global leader in AI chip design and software, Nvidia controls 80% to 95% of the market, according to Reuters. Nearly half of its revenue comes from major tech firms like Microsoft, Amazon, Google, and Meta.




Meanwhile, competition is intensifying, with rival AMD recently acquiring ZT Systems in a $4.9 billion deal to bolster its AI server capabilities—an area that has been key to Nvidia’s growth.