Nvidia beats guidance but disappoints market

Business news | August 29, 2024

By Peter Clarke

AI processor market leader Nvidia’s achieved US$30 billion revenue in its second quarter of FY2025. This beat its own guidance and analysts’ forecasts of US$28 billion but still disappointed the market.

This was likely because of a relatively modest growth outlook given for the next quarter and the admission of problems with upcoming Blackwell chips.

The revenue was up 15 percent sequentially and more than doubled the revenue of a year before with a jump of 122 percent. The datacenter revenue of US$26.3 billion was up 16 percent sequentially and up 154 percent beyond the same figure a year before.

However, Nvidia had previously been quadrupling revenues year-on-year and the reduction to just 2.2x and 2.5x had the Nvidia share price moving lower in after-hours trading and losing as much as 7 percent.

Nvidia continues to quadruple sales year-on-year

“Hopper demand remains strong, and the anticipation for Blackwell is incredible,” said Jensen Huang, founder and CEO of Nvidia, referring to two leading AI products in a statement. There had been rumors of a need to respin the forthcoming Blackwell processor due to production issues or a design flaw, although brokers have also said that Nvidia’s ability to supply the market with Hopper means a delay to volume Blackwell supply will make little difference to the company’s revenues.

“Blackwell samples are shipping to our partners and customers,” said Huang.

Nvidia admitted that there had been production issues with Blackwell and that it was making changes to try and improve yield. Huang told Bloomberg TV that Nvidia will have plenty of Blackwell architecture chips after manufacturing gains momentum.

The company made a net profit of US$16.6 billion representing 55.3 percent of sales and plans to return cash to shareholders via share buy-back scheme for which it has allocated US$50 billion.

Nvidia’s outlook for 3QFY25 is US$32.5 billion, plus or minus 2 percent. At the mid-point this would be 2.8x the US$18.12 billion revenue achieved in 3QFY24.