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ai chip giant nvidia's sales revenue continued to double in the past quarter, exceeding expectations, and this quarter's guidance failed to meet wall street's most optimistic expectations. for the advanced chip blackwell architecture chip, which has attracted much attention due to news of delayed shipments, nvidia optimistically expects that it will bring in billions of dollars in revenue in the last quarter of this fiscal year. however, in the earnings call, nvidia executives did not answer the question of whether the billions of dollars in revenue were new revenue.

after the u.s. stock market closed on wednesday, august 28, eastern time, nvidia announced the company's second quarter financial data for fiscal year 2025 (hereinafter referred to as the second quarter) ending july 28, 2024, as well as performance guidance for the third quarter (hereinafter referred to as the third quarter).

1) key financial data：

operating income: second quarter revenue was $30 billion, up 122% year-on-year. analysts expected $288.6. nvidia's own guidance was $27.44 billion to $28.56 billion, up 262% year-on-year in the previous quarter.
EPS: adjusted earnings per share (eps) on a non-gaap basis in the second quarter were $0.68, up 152% year-on-year, compared with analysts' expectations of $0.64 and up 461% year-on-year from the previous quarter.
gross profit margin: the adjusted gross profit margin in the second quarter was 75.7%, up 4.5 percentage points year-on-year and down 3.2 percentage points month-on-month. analysts expected 75.5%. nvidia guided for 75% to 76%. the previous quarter was 78.9%, up 12.1 percentage points year-on-year.

2) segment business data：

data center: data center revenue in the second quarter was $26.3 billion, a year-on-year increase of 154%. analysts expected $25.1 billion, a year-on-year increase of 427% in the previous quarter.
gaming and ai pcs: in the second quarter, the gaming and ai pc business revenue was us$2.9 billion, a year-on-year increase of 16%, and a year-on-year increase of 18% in the previous quarter.
professional visualization: professional visualization revenue in the second quarter was $454 million, a year-on-year increase of 20%, and a year-on-year increase of 45% in the previous quarter.
cars and robots: in the second quarter, the automotive and robotics business revenue was us$346 million, a year-on-year increase of 37%, and a year-on-year increase of 11% in the previous quarter.

3) performance guidance：

revenue: third-quarter revenue is expected to be $32.5 billion, with a fluctuation of 2%, or $31.85 billion to $33.15 billion. analysts' average expectation is $31.9 billion, with a maximum expectation of $37.9 billion.
gross profit margin: the non-gaap gross margin for the third quarter is expected to be 75%, with a fluctuation of 50 basis points, that is, 74.5% to 75.5%.

4) dividends and repurchases

the company returned $15.4 billion to shareholders in the form of stock repurchases and cash dividends in the first half of fiscal 2025. as of the end of the second quarter, the company had $7.5 billion remaining in its stock repurchase authorization.
on august 26, 2024, the board of directors approved an additional $50 billion of stock repurchase authorization with no expiration date.

after the financial report was released, nvidia's stock price, which closed down 2.1% on wednesday, fluctuated after hours, rising by more than 2% at first, then diving and falling. the decline after hours was more than 7%, and then narrowed by more than half to less than 2%. after that, the decline widened again, falling by more than 8%. affected by nvidia's after-hours plunge, nasdaq 100 stock index futures fell more than 1% after hours.

third-quarter revenue guidance slows to double-digit growth, wall street optimistically expects triple-digit growth

according to the financial report data, nvidia continued to crush wall street expectations in the second quarter, with revenue setting a record for a single quarter, higher than the company's entire guidance range, and triple-digit growth for the fifth consecutive quarter. among them, the data center business, which benefited from the ai ​​boom, grew significantly slower than the previous quarter, but still maintained a triple-digit growth rate.

commentators believe that the most impactful factor on nvidia's stock price may be the mixed third-quarter guidance.

based on the guidance range, nvidia expects revenue to grow 75.8% to 82.9% year-on-year in the third quarter, while jpmorgan chase expects revenue to be in the midpoint of the range at $32.5 billion, an increase of 81.8%, and the highest revenue expected by analysts means an increase of 109.2%. in other words, nvidia expects revenue growth in the third quarter to slow to double digits for the first time in the past six quarters, while wall street's optimistic expectations still maintain triple-digit growth.

some commentators said that nvidia may have anticipated that the market might be dissatisfied with the somewhat disappointing performance expectations, so it announced a new $50 billion repurchase plan to try to appease investors. however, at least so far, the large-scale repurchase has not been able to reverse the decline in stock prices, and investors' mentality is still hurt.

huang renxun said that the demand for hopper is strong, and the outside world's expectations for blackwell are "incredible". the demand for liquid cooling is considerable

earlier this month, it was reported that due to design defects, the most advanced ai chip in the blackwell series of chips will be delayed for three months or more, and the large-scale shipment of blackwell may be delayed until the first quarter of next year. nvidia responded that the strong demand for hopper chips and the production plan of blackwell chips have not changed.

morgan stanley's research report last weekend predicted that nvidia's second-quarter report is likely to exceed expectations. compared with this quarter's revenue guidance, what the market should really pay attention to is whether nvidia can alleviate investors' concerns about possible delays in shipments of the blackwell architecture.

in the announcement of the financial report, nvidia ceo jensen huang specifically mentioned the extremely high expectations for the blackwell chip when commenting on the second quarter results. he also mentioned the strong demand for hopper.

huang renxun said:

“demand for hopper remains strong and expectations for blackwell are incredible. nvidia achieved record revenue as the world’s data centers go all out to modernize the entire computing stack with accelerated computing and generative ai.”

huang said in the earnings call that the demand for both hopper and blackwell is incredible, and that a lot of demand will be met in the period from now until blackwell is shipped and can be installed.

when asked about the blackwell chip and its need for liquid cooling, and whether it would slow down adoption, huang said the next trillion-dollar infrastructure will be different. blackwell will appear in many forms, some of which do not require liquid cooling. but the need for liquid cooling is very substantial and requires a lot of engineering. he is quite sure that this will happen.

cfo says blackwell has improved, but does not answer whether billions of dollars in revenue in the fourth quarter are incremental

nvidia chief financial officer (cfo) colette kress acknowledged the previous problems with the blackwell chip when commenting on the results, saying that improvements had been made, hinting that it was ready for shipment, and expected that such chips would bring billions of dollars in revenue to the company in the fourth quarter. she said:

"we delivered samples of the blackwell architecture to customers in the second quarter. to improve production yield, we made changes to the blackwell gpu mask. blackwell's production ramp is scheduled to begin in the fourth quarter and continue until fiscal 2026. in the fourth quarter, we expect blackwell to achieve billions of dollars in revenue. hopper demand is strong, and shipments are expected to increase in the second half of fiscal 2025."

during the earnings call, bernstein analysts asked about blackwell's revenue and gross margins. kress did not answer questions about whether the billions of dollars in revenue blackwell brought in in the fourth quarter was incremental.

kress said the existing product line, hopper, will continue to grow, and blackwell will be additional revenue on top of that. the company is on track to reach its overall gross margin target of about 75%.

kress also mentioned the chinese market, saying that competition in this market is still fierce, and nvidia's data center revenue in china is still lower than before. she said that in the second quarter, data center revenue in china increased month-on-month, and china is an important market for data center revenue, but it is lower than before.