After the market closed today, Nvidia (NASDAQ: NVDA) reported results for the second quarter of the current fiscal year, which ended on July 28. The successful artificial intelligence (AI) company has once again shown major revenue and profit outperformance.
Nvidia’s revenue rose 122% year-over-year and non-GAAP (adjusted) earnings per share jumped 152% to $0.68. Meanwhile, the average estimate of analysts, as polled by LSEG had asked the company to report revenue of $28.7 billion and earnings of $0.65 per share.
The artificial intelligence (AI) leader beat Wall Street’s midpoint sales target by 4.5% and its midpoint profit target by 6.25%. The company also crushed its own forecast, which called for $28 billion in revenue and an adjusted gross margin of 75.5%.
Nvidia Delivers More Big Wins in Data Center AI
Nvidia’s data center segment was once again the standout performance driver in Q2. Segment revenue increased 154% year over year to $26.3 billion, accounting for 87.7% of total revenue. Revenue also increased 16% quarter over quarter. With tech giants like Microsoft, Amazon, Meta platformsAnd Alphabet By investing heavily to stay at the forefront of artificial intelligence, Nvidia’s AI-focused graphics processing units (GPUs) are in high demand.
Nvidia’s GPUs have become the foundational hardware powering the artificial intelligence (AI) revolution, and the company has a clear performance advantage when it comes to delivering processors to power today’s most advanced artificial intelligence applications. Thanks to the dominance of its CUDA software platform for using GPUs for AI and other accelerated computing applications, the company has created an ecosystem with a clear performance advantage and high switching costs. If the company can continue to combine meaningful hardware advantages with industry-standard software tools, its competitive advantage will be very difficult to shake.
While competitors, including Advanced micro devices And Intelattempt to carve out a share of the datacenter GPU market, there’s little sign that either will dampen Nvidia’s momentum in the space. Some estimates put the company’s share of the AI GPU and accelerator market at 95% or higher.
Nvidia’s other segments also contributed to the excellent quarter
While the data center segment was the main outlier and performance driver, Nvidia’s other segments also posted encouraging results. Gaming segment revenue increased 16% year over year to $2.9 billion, accounting for about 10% of quarterly revenue in the period. Meanwhile, professional visualization segment revenue increased 20% year over year to $454 million, and automotive and robotics segment revenue increased 37% to $346 million.
The sales contributions from these other segments may seem relatively small compared to what’s happening in the data center, but they’re still significant. High expectations from Wall Street analysts and other investors meant Nvidia had to fire away with its Q2 report, and the company delivered.
What’s next for the leading AI player?
In addition to the blockbuster Q2 results, Nvidia released performance targets for fiscal Q3. The company is forecasting revenue of approximately $32.5 billion, which would represent annual growth of about 80%. Management is also predicting an adjusted gross margin of 75% and adjusted operating expenses of approximately $3 billion.
Like its Q2 results, Nvidia’s forward guidance looks very encouraging. The AI leader’s sales forecast easily beats the average analyst estimate for $31.7 billion in revenue in the period, and its gross margin target suggests the company sees little erosion of pricing power when it comes to data center GPUs and accelerators. For comparison, the company posted an adjusted gross margin of 78.9% in the first quarter of this year and a margin of 75.7% in Q2.
Nvidia is now shipping samples of its next-generation Blackwell chips, and the company expects the new hardware to be its most successful product yet. While there’s still some uncertainty surrounding the release timing for its first Blackwell processors, the new platform is poised to become a major driver of sales and margins. Nvidia passed the test with its recent quarterly report, and the company has never looked stronger.
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Nvidia Delivers Another Excellent Quarter and Looks Poised for More Big Wins was originally published by The Motley Fool
