Nvidia beat expectations again, but investors want more

Nvidia delivered another stellar performance, beating expectations, when it reported earnings yesterday. However, the company’s shares declined 6.5% in after-hours trading as the figures didn’t impress investors.

The chipmaker reported its sales more than doubled to $30 billion, and profits reached $16.6 billion. The company has reported three straight quarters of growth.

Data center revenue skyrocketed by 154% to $26.3 billion, buoyed by ongoing investments in AI from major tech companies like Microsoft, Amazon, Meta and Google.

Nvidia also posted a better-than-expected revenue outlook for the current quarter, projecting $32.5 billion in sales. But it fell short of forecasts. 

The company also announced a $50 billion stock buyback.

Despite impressive figures, Nvidia’s investors feel the company didn’t beat expectations by much compared to previous quarters.

Investors also expressed worries over production issues with the company’s next-generation Blackwell chips, which needed a design tweak, resulting in a $908 million provision.

This production delay raises concerns about Nvidia’s ability to keep up with the accelerating pace of the AI market.

Challenges ahead
Nvidia faces growing competition, regulatory scrutiny in the US and South Korea, and sales restrictions in China.

Moreover, rivals like Advanced Micro Devices (AMD) are expected to generate $4.5 billion in AI chip revenue this year.

Nevertheless, Nvidia’s position remains robust, with Gartner predicting AI chip sales to surpass $84 billion this year, up from May’s $71 billion estimate.