NVIDIALatest Revenue The report, released on Wednesday (August 28), revealed a contradiction as demand for artificial intelligence chips has driven record profits while slowing growth has spooked investors.
The company’s performance continued to be strong in the second quarter, especially in its data center division, which includes AI-focused products, but quarter-over-quarter growth slowed compared to its unprecedented expansion. Saw The shift suggests that an initial surge in demand for AI chips is tailing off at a more sustainable pace.
Nvidia shares fell in after-hours trading despite beating analysts’ expectations. The market reaction highlighted the high growth expectations built into Nvidia’s valuation and growing investor concerns about the long-term sustainability of AI-driven growth in the semiconductor industry.
Nvidia reported total revenue of $30 billion, up 15% from the previous quarter and up 122% from $13.5 billion in the same period last year.
The results paint a nuanced picture for the AI chip market: Demand remains strong, but the slowing sequential growth could indicate that AI companies and cloud providers are digesting big hardware investments, or it could signal that the first wave of AI infrastructure buildouts is maturing.
Demand for AI remains strong, but growth is slowing
“NVIDIA delivered record revenue as data centers around the world work to modernize their entire computing stack with accelerated computing and generative AI,” said NVIDIA founder and CEO. Jensen Huang He made the remarks during the earnings announcement.
He highlighted the continuing demand for the company’s current GPU architecture. hopperand the future Blackwell generation.
But on a conference call with analysts, management said Blackwell’s ramp-up will come in the fourth quarter. Analysts had expected Blackwell to start shipping at full capacity this quarter. StreetIt’s a setback that could further impact Nvidia’s growth trajectory.
The slowing growth comes amid growing challenges for Nvidia in the AI space, as competition in the AI chip market heats up. Am and Intel In addition, as major technology companies complete their initial AI infrastructure buildout, Occurring On the sustainability of demand for Nvidia’s high-end chips.
Despite these challenges, Nvidia Place The company is positioning itself as a comprehensive AI solutions provider, and Huang has focused on new product categories. Acquire Traction.
“SpectrumX Ethernet AI and Nvidia AI Enterprise “Software is two new product categories that have achieved significant scale, demonstrating Nvidia’s full-stack, datacenter-scale platform,” he said in the release.
This diversification could help mitigate a potential slowdown in GPU demand, but it could also create new competitive challenges.
Regulatory scrutiny and market reaction intensify
Increasing regulatory scrutiny also could add new obstacles to Nvidia’s growth ambitions: The company said it had received requests for information from regulators in the U.S. and South Korea, in addition to existing inquiries from the European Union and the U.K. and China, Reuters reported.The requests relate to various aspects of Nvidia’s AI business, including GPU sales, supply allocations and partnerships with companies that develop foundational models, the company said in its first-quarter earnings call. Filing and Securities and Exchange Commission (SEC).
Nvidia’s third-quarter guidance suggests the company expects growth to continue to slow: It forecasts revenue of $32.5 billion, plus or minus 2%, in the release. this is This represents a more moderate quarter-over-quarter increase compared to recent quarters. Adjusted Gross margin was 75% (plus or minus 50 basis points), slightly below analysts’ average estimate of 75.5%.
“Generative AI will revolutionize every industry,” Huang said in the release, maintaining his optimistic long-term outlook.
But the immediate challenge for Nvidia will be navigating a transition from explosive growth to a more sustainable pace while maintaining its leadership in the AI chip market.
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