Nvidia shares dipped in U.S. premarket trade on Thursday, as the company’s fiscal second-quarter gross margin dipped slightly, and its revenue beat was eclipsed by a backdrop of increasingly lofty expectations.
The company’s stock was down 4.6% in premarket deals, but had pared losses to a drop of 3.6% at about 8:15 ET.
Nvidia reported July quarter revenue on Wednesday of more than $30 billion, up 122% year on year.
But as Nvidia continues its rapid expansion, the annual comparisons are getting tougher.
Nvidia issued market-beating revenue guidance for its fiscal third quarter of $32.5 billion.
The pullback in the stock on Thursday also comes after a meteoric rally, with Nvidia’s shares rising more than 150% this year to date.
The current fall in Nvidia’s stock price also weighed on shares of semiconductor firms around the world, with big names including memory maker Samsung and chip manufacturer Taiwan Semiconductor Manufacturing Co. lower on Thursday.
Nvidia addressed another concern during its earnings call — the reported delays to its next-generation Blackwell AI chip.
“In the fourth quarter, we expect to ship several billion dollars in Blackwell revenue,” Nvidia Chief Financial Officer Colette Kress said on a call with analysts.
The company also announced a $50 billion stock buyback program.
Nvidia’s stock fell in the U.S. s. premarket trade on Thursday, with the company’s revenue beat overshadowed by a backdrop of progressively higher expectations, and its fiscal second-quarter gross margin slightly declining.
About 8:15 ET, the company’s stock saw a reduction in losses to 3 points, after having dropped 4 points in premarket trading.
On Wednesday, Nvidia revealed its July quarter revenue, which increased by 122% year over year to over $30 billion.
The revenue growth was in the triple digits for the fourth consecutive quarter. However, the yearly comparisons are becoming more difficult as Nvidia keeps growing quickly.
With respect to its fiscal third quarter, Nvidia provided revenue guidance for $32.5 billion, surpassing the market. That would suggest a slowdown from the July quarter but an increase of 80% year over year.
For the entire year, the company predicted that gross margins would be in the “mid-70 percent range.”. According to StreetAccount, analysts had projected a full-year margin of 76.4%.
Nevertheless, experts stated that a significant surge in Nvidia’s stock price following the results would have required the company to surpass all projections.
The stock’s Thursday decline follows a wild surge that saw Nvidia’s shares soar more than 150 percent so far this year. As one of the major winners from the artificial intelligence boom, the stock has increased by more than 750 percent since the beginning of 2023. Nvidia’s graphics processing units are being purchased by large technology companies, who are using them to train massive AI models.
Taiwan Semiconductor Manufacturing Co. and memory manufacturer Samsung were among the well-known companies whose stock prices were negatively impacted by the recent decline in Nvidia’s price. Thursday’s is lower.
The rumored delays to Nvidia’s next-generation Blackwell AI chip were the subject of another discussion during the company’s earnings call.
“We anticipate shipping several billion dollars in Blackwell revenue in the fourth quarter,” Nvidia Chief Financial Officer Colette Kress stated during a conference call with analysts.
Additionally, the business disclosed a $50 billion stock repurchase program.
This report was enhanced by Kif Leswing of CNBC.
