Shares of Nvidia (NVDA) are up 8% after the microchip designer issued second-quarter financial results that crushed Wall Street expectations and raised its forward guidance.
Fueled by growing demand for its microchips that are used in artificial intelligence (A.I.) applications, Nvidia reported earnings per share (EPS) of $2.70 U.S. versus $2.09 U.S. that was the consensus expectation of analysts.
Revenue in Q2 amounted to $13.51 billion U.S. compared to $11.22 billion U.S. that had been forecast on Wall Street.
Nvidia’s revenue in Q2 doubled from $6.7 billion U.S. a year earlier and rose 88% from the previous first-quarter.
The company also reported that its gross margins increased 25.3 percentage points to 71.2% during Q2 because of growth in data centre sales.
Nvidia raised its forward guidance for the current third quarter, saying it now expects revenue of $16 billion U.S., which is higher than the $12.61 billion U.S. the company previously forecast.
The higher guidance suggests that sales in Q3 will grow 170% from a year earlier.
Expectations for Nvidia’s Q2 earnings were high and the company delivered, beating expectations, and pushing the technology-laden Nasdaq index up more than 1% as a result.
Nvidia’s strong sales and guidance demonstrate how important the company’s graphics processing units (GPUs) have become to the A.I. sector.
The company’s A100 and H100 microchips are needed to build and run A.I. applications such as ChatGPT and other services that respond to text queries with conversational answers.
The strong Q2 performance was driven by Nvidia’s data centre business, which includes sales of its A.I. chips as cloud service providers and internet companies bought its processors.
In all, the data centre unit reported Q2 sales of $10.32 billion U.S., up 171% from a year ago and above the $8.03 billion U.S. expectation of analysts.
The gaming division, which used to be Nvidia’s core business, saw its revenue rise 22% from a year earlier to $2.49 billion U.S., topping the $2.38 billion U.S. estimate on Wall Street.
Nvidia’s board of directors has approved a new $25 billion U.S. share repurchase program after the company bought back $3.28 billion U.S. of its own stock in Q2.
Nvidia’s stock has more than tripled this year, making it the top performer in the S&P 500 index and giving the company a market capitalization of more than $1 trillion U.S.
The company’s share price is set to open above $500 U.S. today (August 24).
Tech Insider
