NVIDIA Stock Down Despite Strong Q2 Results, $50 Bln Buyback

(RTTNews) - Shares of Nvidia Corp. were losing nearly 5 percent in the pre-market activity on the Nasdaq after the artificial intelligence or AI chipmaker issued sequentially lower third-quarter margin view, and maintained its fiscal 2025 margin forecast. This was despite reporting significantly higher profit in its second quarter with more-than doubled revenues, and also announcing a hefty $50 billion share repurchase authorization, without expiration.

The world's most valuable company with a market value of more than $3 trillion on the strength of surging demand for artificial intelligence or AI chips reported a 122.4 percent jump in its second-quarter revenues.

Jensen Huang, founder and CEO of NVIDIA, said, "Hopper demand remains strong, and the anticipation for Blackwell is incredible. NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI."

NVIDIA also said it will pay its next quarterly cash dividend of $0.01 per share on October 3 to all shareholders of record on September 12.

For the third quarter, gross margin is expected to be 74.4 percent on a reported basis and 75 percent on an adjusted basis, plus or minus 50 basis points. This is compared to the sequential second quarter's reported gross margin of 75.1 percent and adjusted gross margin of 75.7 percent, which was also down sequentially due to a higher mix of new products within Data Center and inventory provisions for low-yielding Blackwell material.

Total revenue for the third quarter is expected to be $32.5 billion, plus or minus 2 percent. Analysts on average expect the company to record revenues of $31.77 billion for the quarter, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

The company noted that the third-quarter revenue outlook incorporates continued growth of Hopper architecture and sampling of Blackwell products.

The company expects Blackwell production ramp in its fourth quarter.

In its second-quarter earnings call, Colette Kress, Chief Financial Officer, noted that NVIDIA is going to see some slight difference in margin possibly in the fourth quarter, again with its transitions and the different cost structures that it has on new product introductions.

For fiscal 2025, the company continues to expect gross margins in the mid-70 percent range, or around 75 percent, while last year's margin was 72.7 percent.

In its second quarter, NVIDIA reported a significant growth in profit that beat the Street estimates. The company's bottom line totaled $16.60 billion or $0.67 per share, higher than $6.19 billion, or $0.25 per share last year.

Adjusted earnings were $16.952 billion or $0.68 per share for the period. Analysts had expected the company to earn $0.64 per share.

The company's revenue for the quarter grew to $30.04 billion from $13.51 billion last year.

Data Center revenue of $26.3 billion was up 154 percent year on year, driven by strong demand for NVIDIA Hopper, GPU computing, and our networking platforms.

Compute revenue grew more than 2.5x. Networking revenue grew more than 2x from the last year. Cloud service providers represented roughly 45 percent of Data Center revenue, and more than 50 percent stemmed from the consumer Internet and enterprise companies.

In pre-market activity on the Nasdaq, NVIDIA shares were trading at $119.88, down 4.6 percent. This after losing 2.1 percent on Wednesday's regular trading.

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