Nvidia Exceeds Guidance, Market Left Disappointed

Following Nvidia's recent financial report, the company experienced a notable increase in revenue, with a 15 percent sequential growth and a remarkable 122 percent jump compared to the previous year. The datacenter revenue also saw a significant rise, reaching US$26.3 billion, marking a 16 percent sequential increase and a remarkable 154 percent surge from the same period a year ago.

Despite these positive figures, Nvidia's revenue growth rate has slowed down compared to previous years, where the company was quadrupling its revenues annually. The reduction to just 2.2x and 2.5x growth rates led to a decline in Nvidia's share price during after-hours trading, with a drop of up to 7 percent.

In a statement, Jensen Huang, the founder and CEO of Nvidia, expressed optimism about the demand for the upcoming Hopper and Blackwell chips. While there were rumors of production issues or design flaws with the Blackwell processor, Huang reassured that the company's ability to supply the market with Hopper products would mitigate any potential delays in Blackwell's release.

Addressing the production challenges, Nvidia acknowledged issues with the Blackwell chips and mentioned ongoing efforts to enhance yield rates. Huang confirmed that Blackwell samples were already being shipped to partners and customers, with plans to scale up production as manufacturing processes improve.

Looking ahead, Nvidia announced a net profit of US$16.6 billion, representing 55.3 percent of sales. The company intends to return cash to shareholders through a share buy-back scheme, with a budget of US$50 billion allocated for this purpose. Nvidia's outlook for the third quarter of fiscal year 2025 is set at US$32.5 billion, with a potential growth rate of 2.8x compared to the previous year's revenue.