Stock market stopper Nvidia (NVDA) revealed in an earnings call that it beat analysts’ lofty expectations with its financial performance for the second quarter of its fiscal year. The Santa Clara, California-based technology company reported quarterly revenue of just over $30 billion, which far exceeded forecasts of $28.7 billion and was a 122% improvement over the year-ago quarter. Net income came in at nearly $16.6 billion, a 168% improvement over the year-ago figure. Earnings per share came in at $0.67, also up 168% from a year ago and again above the $0.65 expected. The company also announced a $50 billion share buyback program. Here’s what you need to know.
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Nvidia’s Fiscal Year 2025 Q2 Earnings
Nvidia’s August 28 earnings call was one of the most anticipated events of the year on Wall Street, with investors waiting to see if the company’s stellar financial performance would continue into the second quarter of fiscal 2025. Executives, including CEO Jensen Huang, didn’t disappoint, delivering a fiscal statement that showed Nvidia beating most experts’ expectations, even surpassing its robust first-quarter results.
The $30 billion in revenue was about $1.3 billion more than analysts had forecast. And earnings per share of $0.67 were about $0.02 per share above expectations. Both figures, along with net income of $16.6 billion, were up sharply compared with Nvidia’s first quarter of fiscal 2025, as well as the second quarter ended in July 2024.
Huang and CFO Colette Kress walked listeners through the numbers, which showed that gaming and graphics, the businesses Nvidia got its start in 1993, lagged far behind data center sales. Data center revenues accounted for $26.3 billion, up 154 ​​percent from a year earlier, while gaming contributed $2.8 billion in sales, up 16 percent from the year-ago quarter.
Nvidia Stock Performance and Buybacks
Powered by artificial intelligence systems that rely on its chips and other products, Nvidia’s market cap has surged nearly 1,000% since November 2022, shortly before ChatGPT kicked off the AI ​​craze. The company recently became only the fourth publicly traded company to reach a market cap of more than $3 trillion, joining tech elites Apple, Google and Microsoft.
Given the rapid rise in the stock price, which was trading at 100 times earnings, there was some doubt that a disappointment or even a less-than-stellar performance from Nvidia could trigger a significant correction. While the stock traded after hours following the earnings call, which took place after markets closed, the stock was up about 2% the morning after the call, to around $120.
During the conference call, executives announce that a $50 billion share buyback program has been approved by the board of directors. Buybacks typically generate upward price pressure on a company’s stock as the company collects its own shares with excess earnings.
Meanwhile, the company completed a 10-for-1 stock split in June. A quarterly dividend of $0.01 per share will be paid on Oct. 3 to shareholders of record on Sept. 12.
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Nvidia’s company
Nvidia’s explosive growth in sales and profits comes amid a global trend of massive investment in artificial intelligence by companies ranging from startups to tech giants. It’s the leading supplier of the high-performance processors that power all sorts of AI products and services, including the large language models behind ChatGPT and others, as well as systems for targeting ads, tailoring suggestions to shoppers and social media users, and more.
The company’s existing products, led by its Hopper graphical processing unit (GPU) line, are said to hold as much as 95 percent of the global market for chips used in AI systems. During the earnings call, Huang said Hopper sales are still growing even as the company prepares to roll out its next wave of products based on a chip design called Blackwell, which are expected to generate billions of dollars in sales in the fourth quarter.
Analysts on the call asked several questions about whether global corporate spending on AI hardware, particularly Nvidia chips, is expected to remain at current high levels. Market watchers have recently expressed skepticism that AI spending will pay off anytime soon, if ever, suggesting that there will soon be a slowdown in purchases of hardware and software to equip new AI-focused data centers.
Huang responded that while AI helped Nvidia’s sales grow, a larger trend was a shift from computing systems based on more conventional central processing unit (CPU) chips, which were running up against performance limits, to faster systems powered by GPUs like Nvidia’s. These accelerated computing systems are much faster and use less power, and will eventually replace most or all of the existing global computing infrastructure, Huang said.
He and CFO Kress presented guidance for the third quarter, suggesting the company would have $32.5 billion in revenue, with profit margins holding steady. Neither stressed caution. “Next year is going to be a great year,” Huang told listeners. “We expect our data center business to grow significantly. Blackwell is going to be a game changer for the industry.”
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Conclusion
Nvidia posted another strong quarter, with revenue and earnings that beat analysts’ expectations and suggested the company’s recent rocket-like growth trajectory has yet to peak. With both revenue and net income up by triple-digit percentages compared to last year’s second quarter, the maker of high-performance processors continued a string of impressive quarterly results that sent its shares up 150% through the first half of 2024. Company executives provided guidance indicating that growth is likely to continue into the next quarter and responded to questions about whether the results were sustainable by suggesting the company’s growth still has a long way to go.
Tips
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