Nvidia Stock Rallies as Results Outperform and $108B Revenue Guidance Impresses

Nvidia posted better-than-expected fiscal second-quarter results Wednesday, beating Wall Street forecasts while projecting $108 billion in revenue for the upcoming quarter.

The chipmaker reported $96.2 billion in revenue, exceeding the $92.27 billion analyst consensus. Data-center revenue totaled $89 billion, ahead of the $85.4 billion estimate, while earnings per share reached $2.22, compared with the expected $2.09.

Nvidia shares rose about 4% in after-hours trading after the results were released. Bitcoin, meanwhile, remained relatively range-bound above $78,000.

CEO Jensen Huang said the AI industry is reaching an inflection point, with demand for computing infrastructure accelerating as AI adoption expands.

For the fiscal third quarter, Nvidia expects revenue of $108 billion, higher than Wall Street’s $103.9 billion projection. A quarterly revenue figure above $100 billion would place Nvidia among a select group of S&P 500 companies to reach that threshold.

The outlook for profitability was more cautious. Nvidia expects gross margin to decline to 74% in the next quarter from 75% in the second quarter, a forecast that may have tempered the stock’s initial gains.

Thomas Monteiro, a senior analyst at Investing.com, said Nvidia is facing increasing margin pressure as costs for memory, financing and infrastructure rise.

Monteiro noted that the projected 74% margin would represent the first sequential decline in the current cycle. He also warned that higher memory prices could challenge Nvidia’s ability to maintain margins in the mid-70% range.

The company may also have limited scope to pass rising expenses on to customers, Monteiro said, as major technology companies are dealing with increased spending and higher borrowing costs.

While describing the quarter as strong by almost every measure, Monteiro said the results could prompt investors to reassess Nvidia’s medium-term growth outlook.

He added that the long-term AI opportunity remains substantial, but the important question is how effectively Nvidia can turn its expanding revenue base into margins and cash flow.

During the earnings call, Huang highlighted several supply and cost pressures facing the business.

He said Nvidia is working with memory suppliers and securing capacity for power, land and data-center infrastructure as demand remains above available supply.

Huang also mentioned a planned price increase for the first quarter. He argued that Nvidia’s systems can generate significant returns for customers, giving the company some ability to pass higher costs through to buyers.