CEO Jensen Huang talked up Blackwell but did not satisfy Wall Street's sky-high expectations

Noah Berger/Getty Images; Jenny Chang-Rodriguez/BI; Chelsea Jia Feng/BI

Nvidia reported its second-quarter earnings after Wednesday’s closing bell.
The chipmaker beat second-quarter revenue and EPS estimates.
Nonetheless, Nvidia’s stock slid after its Q3 revenue guidance did not hit essentially the most bullish of expectations.

Nvidia delivered strong second-quarter earnings on Wednesday — but that wasn’t enough to satiate the sky-high expectations of some on Wall Street.

The corporate’s stock, which is understood to fluctuate significantly within the wake of its earnings, was down greater than 5% in after-hours trading after the corporate failed to satisfy the best of analysts’ expectations for Q3 revenue guidance.

But the corporate demonstrated that AI spending continues to be going strong.

The chipmaker notched $30.04 billion in revenue for the past quarter, outpacing consensus estimates of $28.86 billion. Nonetheless, it was a slimmer revenue beat than recent quarters.

The corporate also beat estimates for guidance, reporting it expects about $32.5 billion in Q3 revenue, in comparison with average estimates of $31.77 billion.

Nonetheless, that Q3 revenue forecast failed to satisfy among the loftiest expectations for the third quarter, or the Wall Street “whisper number” that some analysts hoped the corporate would hit. Dan Morgan, an investor at Synovus, said the Wall Street whisper number was $33 billion to $34 billion.

Anticipation has been high for Nvidia’s earnings, because the firm has essentially develop into a bellwether for the broader AI industry.

The massive query on everyone’s mind was the status of the much-anticipated Blackwell chips, the following generation after the Hopper GPUs that tech corporations have been clamoring to get their hands on. Recent reports of a possible delay in Blackwell’s rollout drew concerns over the possible industry impact.

Nvidia CEO Jensen Huang said Blackwell demand was “incredible” and the corporate said it expected to ship “several billion” in revenue from sales of the brand new chip architecture in Q4. However it also acknowledged that production problems related to Blackwell impacted gross margins prior to now quarter.

“We shipped customer samples of our Blackwell architecture within the second quarter,” Nvidia’s CFO said in prepared remarks.

“We executed a change to the Blackwell GPU mask to enhance production yield,” she added. “Blackwell production ramp is scheduled to start within the fourth quarter and proceed into fiscal 2026.”

Huang said demand continued to be “really strong” for Nvidia’s existing Hopper chips, and that AI corporations were seeking to deploy their capital and construct out their data centers now with what was currently available.

While fielding questions from analysts, Nvidia’s CEO said that the corporate is seeing the “momentum of generative AI accelerating.”

That is a wrap! Huang ends the decision with closing remarks and a summary of his 5 predominant takeaways.

Along with emphasizing Hopper’s continued demand, Huang highlights the highest takeaways of the decision before signing off.

His points include that the chipmaker is on its journey to modernize a trillion dollars value of knowledge centers from general-purpose to accelerated computing.

He also reminds analysts that Blackwell is an AI infrastructure platform, not only a GPU, and highlights its performance gains over Hopper.

Huang mentions the importance of NVLink, which is significant for low latency, high output, and huge language models.

Huang also briefly discusses the rapid acceleration of generative AI and the way it’s evolving into different modalities. He mentions how Nvidia can assist different businesses with AI developments and ends the decision.

The stock continues to be trading down greater than 5% as the decision concludes.

Nvidia’s CEO fields a final query from analysts.

Huang talks up Nvidia’s approach to the Blackwell system rack, and the assorted configurations it is available in, and the logistics hubs the corporate has scaled out with partners to be certain it could meet customers’ specific demands for his or her data centers.

Demand for Hopper is predicted to proceed, however it’s not clear how much

Kress says Hopper will proceed to grow within the second half of the yr, but is not giving exact estimates on what’s expected within the third or fourth quarter.

Revenue from the start of Blackwell’s rollout might be on top of that in Q4.

To date, the executives’ statements have not been capable of push the stock out of the red in after-hours trading.

The stock continues to be trading down greater than 5% in after hours trading midway through the earnings call.

Huang talks about why Hopper demand continues to be high as Blackwell rollout approaches

Huang says demand for Hopper is “really strong” while demand for Blackwell is “incredible.”

Nvidia’s CEO says gen AI corporations spend the overwhelming majority of invested capital into infrastructure, and these corporations “need it now” — that is where Hopper chips come into play, as they’re available now.

So while interest in Blackwell and its ramp is high, standing up Blackwell’s capability continues to be weeks or months away, and the Hopper series is there to catch immediate demand.

Nvidia’s CFO talks in regards to the increase in sovereign AI revenue

Kress said “there’s an increasing number of excitement” around AI models and what they’ll offer to different countries.

Nvidia’s CEO explains what’s happening with gen AI without delay

Huang does a transient dive into the state of gen AI following an issue about how Nvidia is measuring customer return and the way that impacts its capital expenditures.

“We’re seeing momentum of generative AI accelerating,” Huang says.

He mentions that frontier models are growing at a considerable rate and the industry is seeing the advantages of scaling.

To satisfy demand, Nvidia has to proceed to drive down energy consumption and costs, the CEO says.

Huang says the change to the Blackwell GPU mask is complete

“There have been no functional changes crucial,” Huang said, reiterating that Blackwell production is predicted to start out within the fourth quarter.

It is time for analysts’ questions.

Questions from analysts have begun. The primary query is about every other changes to the Blackwell system.

The CFO expects China to be a really competitive market going forward

Kress says data center revenue from China stays below previous levels as a consequence of export controls.

But data center revenue in China still grew sequentially within the second quarter and acted as a “significant contributor” to its total data center revenue, the CFO says.

The earnings call has kicked off!

Nvidia CEO Jensen Huang is on the decision. CFO Colette Kress kicks off the decision and begins delivering prepared remarks. The executives will field questions from analysts shortly.

Expect analysts to press for more on expected Blackwell Q4 sales

Nvidia said it began shipping customer samples of its Blackwell architecture in Q2 and expects production to ramp up in Q4 and into the next yr.

But analysts will likely attempt to needle in on the expected “several billion dollars in Blackwell revenue” the corporate expects within the fourth quarter, on the lookout for additional color from executives on how big or small that number may very well be.

Emarketer analyst reacts to results.

Emarketer technology analyst Jacob Bourne tells BI that Nvidia continues to profit from Big Tech’s investment in AI, which is fueling “massive demand” for Nvidia chips whilst a few of these corporations work to develop their very own rival chips.

“Nvidia once more delivered spectacular results, beating expectations with margins that rival its previous blockbuster quarters,” Bourne said. “Despite growing economic uncertainties and AI bubble concerns.”

Bourne added that the discharge of Nvidia’s Blackwell chip will remain key in its continued dominance as corporations like AMD ramp up their efforts to compete within the chipmaking arena.

Nvidia’s CFO says production problems with the corporate’s recent Blackwell chip were partly liable for a dip in gross margin.

Gross margins, a typical measure of profitability within the chip business, declined from the primary quarter of 2024 to the second quarter.

That was “primarily driven by inventory provisions for low-yielding Blackwell material and the next mix of recent products inside Data Center,” the CFO writes within the earnings release.

The stock slides in after-hours trading after the Q3 revenue forecast fails to top essentially the most sky-high of analysts’ expectations.

Nvidia forecast third-quarter revenue of roughly $32.5 billion. That was below among the unofficial bullish estimates on Wall Street, generally known as “whisper” numbers.

Ahead of Wednesday’s results, Dan Morgan, an investor at Synovus, said the Wall Street whisper number was $33 billion to $34 billion.

Nvidia beats 2nd quarter revenue and earnings-per-share estimates, but sales outlook for Q3 didn’t surpass the best of expectations.

2nd quarter

Revenue: $30.04 billion, estimate $28.86 billion

Data center revenue: $26.3 billion, estimate $25.08 billion
Skilled Visualization revenue: $454 million, +20% y/y,
estimate $451.1 million
Automotive revenue: $346 million, +37% y/y, estimate $347.9
million

Adjusted gross margin: 75.7% , estimate 75.5%

R&D expenses: $3.09 billion, +51% y/y, estimate $3.08 billion
Adjusted operating expenses: $2.79 billion, +52% y/y, estimate
$2.81 billion
Adjusted operating income: $19.94 billion, estimate $18.85 billion
Adjusted EPS: 68c, estimate 64c
Free money flow: $13.48 billion

Source: Bloomberg

Wedbush’s Dan Ives touts Nvidia’s earnings as this yr’s most significant report.

Nvidia CEO Jensen Huang holds two products on a stage. — JOSH EDELSON/ Getty Images

Wedbush Securities’ Dan Ives said now could be the time to grab the popcorn, as Nvidia’s earnings should blow Wall Street estimates out of the water.

The tech bull predicted that Nvidia will deliver one other “drop the mic” performance, as appetite for its hardware is stronger than ever.

In his view, previous sector earnings indicate that AI demand has not dissipated, spurring upside for Nvidia.

“The cloud numbers and AI data points from Redmond, Amazon, and Google were very strong during earnings season the previous few months as this means massive enterprise AI demand is now underway,” he wrote in a recent note on Wednesday.

Wedbush estimates that for every $1 spent on a Nvidia chip, there is a $8-$10 multiplier across the tech sector.

“We consider that is a very powerful earnings report for the stock market this yr and potentially in years for the Street as Nvidia might be the earnings report heard world wide,” Ives wrote.

Wedbush holds an “outperform” rating on Nvidia.

Deutsche Bank expects earnings strength as AI demand stays high.

Nvidia’s earnings will mirror past quarter to deliver one other estimate-beating report as AI computing demand stays intact, Deutsche Bank analyst Ross Seymore wrote.

“While on the margin some could also be paring back orders ahead of the launch of Blackwell, we still expect aggregate demand trends to stay healthy,” he wrote.

The bank cited Nvidia’s technology roadmap as one reason for Wall Street to expect further guidance strength from the firm. Nonetheless, Seymore noted that shares in the corporate are already fully valued, as investors are well acquainted with Nvidia’s fundamentals at this point.

Deutsche maintains a “Hold” rating on the firm.

Citi says Nvidia’s earnings could fail to live as much as the past 4 quarters.

Nvidia CEO Jensen Huang.I-Hwa Cheng/AFP/Getty Images

Citi said Nvidia’s earnings will fall in need of the $2 billion estimate beat it achieved over the previous 4 quarters, provided that the potential Blackwell hold-up could impede the firm’s performance.

Nonetheless, the bank still anticipates that Nvidia will outpace Wall Street forecasts by around $1 billion. Total quarterly sales should reach $28.5 billion, Citi said.

Citi analysts predict that consensus estimates will reach higher for the upcoming quarter, as Blackwell comments from Nvidia should reassure investors about a powerful outlook for the following calendar yr. Post-earnings, Nvidia’s stock is prone to reach fresh 52-week highs.

Other than Blackwell’s possible delay, investors will seek guidance on Hopper demand, AI enterprise demand, and updates on Nvidia’s ethernet-based networking product, Spectrum X. They can even seek comments on sovereign AI risk and Chinese GPU restrictions, Citi said.

Citi maintains a “Buy” rating on Nvidia with a goal price of $150 per share.

Bank of America warns Nvidia earnings could also be an underpriced risk.

In keeping with Bank of America, there may be a possibility that Nvidia’s report underwhelms bullish investors.

“NVDA results have been a key driver of equity indices, and investors could also be underpricing the danger of a disappointment,” analysts wrote, suggesting that S&P put options are an excellent trade to hedge against this end result.

That is likely because the Blackwell delay could mute near-term upside, the bank said in an earlier report.

Nonetheless, this issue will more likely test third-quarter results, and Nvidia has ways to dampen any negative impact before then, BofA added. As an illustration, the firm could depend on larger Hopper chip shipments to make up for the Blackwell supply crunch.

“We see any selloff as enhanced buying opportunity as challenges will not be in demand, but in (solvable) supply that won’t fundamentally derail NVDA’s longer-term momentum,” the note said.

Strong Hopper demand this quarter should bolster sales to $28.6 billion, the bank said, outpacing Nvidia’s $28 billion guidance.

Bank of America has a “Buy” rating on Nvidia and a price goal of $150 per share.

Goldman Sachs sees AI demand staying strong, fueling one other big quarter.

Goldman analysts led by Toshiya Hari expect Nvidia’s revenue and earnings-per-share to beat estimates, because the firm’s fundamentals will support more upside.

Strength will come from data center revenue and the corporate’s strong operating leverage, Goldman said. Meanwhile, the bank cited that Nvidia’s hardware continues to be wanted by leading cloud service computers, and the firm maintains its competitive lead within the AI computing sector.

For investors concerned that AI spending has not yet yielded meaningful results, Nvidia’s earnings should combat this narrative, Goldman said.

“We expect Nvidia management to supply ROI metrics available from select customers on this upcoming earnings call as a approach to instill confidence in investors,” Hari wrote.

Nonetheless, investors should anticipate some immediate volatility, Hari wrote, given the Blackwell chip delay.

But this might be a short-term headwind, and Nvidia doesn’t lack solutions. The impact will rely on three aspects: the delay’s extent, whether customers are willing to tackle the older Hopper chip, and Nvidia’s capability to ramp up production of a simplified Blackwell model.

Goldman holds a “Buy” rating on Nvidia and a price goal of $135 per share.

Nvidia’s 2nd-quarter consensus revenue estimate is $28.86 billion.

SECOND QUARTER