While Nvidia’s soaring profits beat Wall Street estimates – shaken by the company’s dominance in chipmaking, which has cemented Nvidia’s position as the poster child of the artificial intelligence boom – investors seemed less than impressed.
The company reported net income of $16.6 billion. Adjusted for one-time items, net income was $16.95 billion. Revenue rose to $30 billion, up 122 percent year-over-year and 15 percent quarter-over-quarter.
For comparison: According to FactSet, S&P 500 companies as a whole are only expected to see sales growth of 5 percent in the quarter.
However, Nvidia shares lost almost 4 percent in after-hours trading.
Nvidia has made the artificial intelligence sector one of the biggest companies on the stock market as the tech giants continue to invest heavily in the company’s chips and data centers needed to train and run their AI systems.
The company is one of the main competitors of Intel, which has been slow to adapt to demand for artificial intelligence chips and is still struggling to catch up.
Nvidia reported adjusted earnings per share of 68 cents per share for the second quarter, up from 27 cents a year earlier.
Demand for generative AI products that can create documents, create images and act as personal assistants has boosted sales of Nvidia’s specialty chips over the past year. In June, Nvidia briefly rose to become the most valuable company in the S&P 500. The company is now worth over $3 trillion.
In the first six months of the year, Nvidia’s share price rose nearly 150%. At that point, the stock was trading at just over 100 times the company’s earnings over the previous 12 months. That’s much more expensive than it’s ever been and than the S&P 500 in general. That’s why analysts are warning of a sell-off if Wall Street sees signs that demand for AI is waning.
The Santa Clara, California-based company got an early lead in the race for AI applications, thanks in part to founder and CEO Jensen Huang’s successful bet on the chip technology that powers the industry. The company is no stranger to big bets. Nvidia’s invention of the graphics processing unit (GPU) in 1999 helped grow the PC gaming market and redefined computer graphics.
— Sarah Parvini, Associated Press
