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although the company delivered an outstanding performance report, the stock price of ai (artificial intelligence) chip leader nvidia fell by more than 8% after the market due to the delay in mass production of the latest chip.

after the market closed on august 28th local time, nvidia (nasdaq: nvda) released its second quarter financial report for fiscal year 2025 ending june 28th. during the period, the company achieved revenue of us$30.04 billion, a year-on-year increase of 122%, higher than the market expectation of us$28.668 billion; net profit was us$16.599 billion, a year-on-year increase of 168%; non-gaap diluted earnings per share were us$0.68, a year-on-year increase of 152%, higher than the expected us$0.64.

at the same time, the company provided guidance for the next quarter's performance, predicting that sales in the third quarter of fiscal 2025 will reach $32.5 billion, with a fluctuation of 2%, which is higher than the market average expectation of $31.9 billion, but significantly lower than the highest expectation of $37.9 billion. nvidia also announced that it will approve an additional $50 billion stock repurchase plan and maintain a quarterly dividend of 1 cent per share.

nvidia ceo jensen huang said: "demand for hopper chips remains strong, and expectations for blackwell are incredibly high. nvidia has achieved record revenue as data centers around the world are modernizing their computing stacks at full speed, adopting accelerated computing and generative ai. blackwell samples have begun shipping to our partners and customers. the spectrum-x ethernet platform for ai and nvidia ai enterprise software, two new product categories, have achieved significant scale...generative ai will revolutionize every industry."

summary of nvidia's second quarter results. source: nvidia's financial report

on the 28th, nvidia's stock price closed at $125.61 per share, down 2.1%, with a total market value of $3.09 trillion. according to wind data, nvidia's stock price has risen by more than 153% since the beginning of this year. however, after the release of the financial report, nvidia's stock price quickly fell after a slight increase, once falling by more than 8%, and then narrowed its decline, falling by nearly 7% as of press time.

blackwell will start mass production in the fourth quarter, no "functional changes" are required

in terms of business, nvidia's most watched data center business once again hit a record high. nvidia's second-quarter data center business revenue was $26.3 billion, higher than the market expectation of $25.2 billion, up 154% year-on-year and 16% quarter-on-quarter. nvidia pointed out that this part of the sales is not all from ai chips, of which $3.7 billion of revenue comes from the company's network products.

however, the news about nvidia's latest ai chip series blackwell, which was launched in march this year, is not entirely optimistic. huang renxun said in a first-quarter earnings call in may that he expected blackwell chips to start shipping in the second quarter of this year and contribute "substantial" revenue to the company within the year. however, at the end of july, there were reports that due to design defects, the first shipment of blackwell would be delayed, which might affect major customers such as meta, google and microsoft, causing market concerns.

on august 4, in response to the news, nvidia responded to the reporter from the paper: "as we have said before, demand for hopper is very strong, sample trials of blackwell have begun widely, and production is expected to increase in the second half of the year. other than that, we do not comment on rumors."

in this financial report, nvidia cfo colette kress said that it will continue to send blackwell samples to partners and customers, but the company needs to "make changes to the mask of the blackwell gpu to improve the production yield of blackwell." nvidia plans to start mass production of blackwell in the fourth quarter and continue until fiscal 2026, and its sales are expected to reach billions of dollars in the fourth quarter.

during the conference call, many questioners were concerned about blackwell's information.huang renxun emphasized that the blackwell chip does not require "functional changes" and is expected to start mass production in the fourth quarter.however, nvidia also said that it expects shipments of the previous generation of hopper chips to increase in the next two quarters rather than gradually decrease.

when asked about the blackwell chip's need for liquid cooling, huang renxun pointed out that "the next trillion-dollar infrastructure will be unique," and that the blackwell chip will function in many forms, some of which do not require liquid cooling, but the demand for liquid cooling is still considerable.

nvidia also mentioned in the conference call that the growth of data center revenue in the chinese market made an "outstanding contribution" to the company's overall revenue.

the company expects software, saas and support services revenue to approach an annualized revenue level of $2 billion by the end of fiscal 2025, with full-year gross margins expected to be in the 70% to 80% range.

in terms of other businesses, as nvidia's "main business", the gaming business had revenue of $2.9 billion in the second fiscal quarter, up 16% from the same period last year. in addition, the professional visualization business had revenue of $454 million, up 20% from the same period last year and up 6% from the previous fiscal quarter. the automotive business had revenue of $346 million, up 37% from the same period last year and up 5% from the previous fiscal quarter.

wall street continues to be optimistic about nvidia's strong momentum

since the ai ​​boom began in 2022, the share price of nvidia, which can provide high-performance ai chips, has continued to rise and is regarded as the "world's most important stock" that drives the global ai and even the entire technology industry chain.

according to factset data, before the earnings report was released, 56 of 61 analysts gave nvidia a "buy" or "outperform" rating, and the remaining 5 gave a "hold" rating. analysts gave nvidia an average target price of $142.63.

previously, morgan stanley predicted in its latest report that if nvidia's revenue in the second fiscal quarter exceeds expectations, the prices of ai-related stocks may have a 3% to 15% upside. if nvidia's financial report performance is lower than expected, the entire ai stock group may have a 5% to 10% downside, and the priority of stock selection may be reversed.

still, morgan stanley analyst joseph moore wrote: "demand (for nvidia chips) shows no signs of easing, and while it is difficult to determine the exact magnitude of the increase, we expect it to maintain recent trends. headwinds include last year's export controls, a possible delay in the release of a stronger blackwell chip, and tactical delays in new product launches, but these factors will not affect the company's strong momentum."

some analysts also pointed out that in the face of the delay in the release of the blackwell chip, nvidia could replace the blackwell chip orders with the previous generation hopper chip. hsbc analyst frank lee wrote in an august report: "we expect nvidia to reduce its focus on the blackwell b100/b200 gpu in the second half of the year and turn its attention to the hopper h200."

analysts at jpmorgan chase expect that nvidia's gb200 chip production capacity may slow down in the second half of 2024, but will rise sharply in 2025. although the blackwell series gpus will face production challenges at the beginning, their shipments are expected to reach more than 4.5 million units in 2025.