Beijing, August 29 (Xinhua) -- After local time on Wednesday, chip giant NVIDIA released its financial report for the second quarter of fiscal year 2025 (the second quarter of 2024) as of July 28 this year.
Although Nvidia's Q2 revenue and profit exceeded Wall Street's expectations, and its Q3 revenue outlook was higher than analysts' average expectations, it fell below the market's most optimistic expectations, causing its stock price to plummet by 8% after hours.
Morgan Stanley pointed out that if Nvidia's revenue exceeds expectations, there may be a 3-15% upside in the prices of AI related stocks. On the contrary, if it falls short of expectations, the entire AI stock group may have 5-10% downside potential, and the priority of stock selection may reverse. However, Morgan Stanley suggests that even if the third quarter financial report is disappointing, "don't give up on AI related stocks". He believes that although the valuation of AI stock has been readjusted, it is far from reaching the level of foam, and it is normal for the stock price to have some pullbacks in the price discovery stage.
Q2 performance exceeds expectations, Q3 revenue guidance falls short of the most optimistic expectations
According to the financial report, Nvidia's revenue for the second quarter reached $30 billion, an increase of 122% compared to the same period last year's $6.18 billion, and a month on month increase of 15%, exceeding analysts' general expectation of $28.7 billion; Net profit of 16.6 billion US dollars, a year-on-year increase of 168% and a month on month increase of 12%; Diluted earnings per share were $0.67, a 168% increase from $0.25 in the same period last year and a 12% increase compared to the previous year, exceeding the average analyst expectation of $0.64.
Nvidia's second quarter revenue was $30 billion, with a year-on-year increase of 122% and a month on month increase of 15%, higher than previous expectations. Under Non GAAP standards, Nvidia's net income for the second quarter was $16.95 billion, an increase of 11% month on month and 152% year-on-year.
Nvidia's Q2 gross profit margin was 75.1%, a decrease from 78.4% in the previous quarter, but still higher than 70.1% in the same period last year.
By business, Nvidia's latest quarterly data center revenue was $26.3 billion, a year-on-year increase of 154% and a month on month increase of 16%; The revenue of gaming and AI PC business reached 2.9 billion US dollars, a year-on-year increase of 16% and a month on month increase of 9%; Professional visual business revenue of 454 million US dollars, a year-on-year increase of 20% and a month on month increase of 6%; The revenue of the automotive electronics and robotics business was 346 million US dollars, a year-on-year increase of 37% and a month on month increase of 5%. Among them, the data center business is still growing rapidly, but the growth rate of this business in the latest quarter is lower than the 427% in the first fiscal quarter. Nvidia's latest quarter's year-on-year revenue growth rate was also lower than the 262% in the first fiscal quarter.
Nvidia expects its full year gross profit margin to reach around 70%, which is lower than analysts' estimate of 76.4% for the full year gross profit margin. In addition, Nvidia announced that it has approved a stock buyback plan worth $50 billion.
Nvidia expects its third quarter revenue to be approximately $32.5 billion, which will increase by 80% compared to the same period last year and exceed the average analyst estimate of $31.7 billion. However, the market's highest expected revenue for Nvidia in the third quarter reached $37.9 billion, which has raised concerns that its explosive growth is weakening.
Kevin Garrigan, an analyst at WestPark Capital, commented that for investors with high expectations, a slightly higher than market average revenue outlook for Nvidia Q3 is not enough.
The next generation AI chip Blackwell will be mass-produced in the fourth quarter
Regarding the highly anticipated next-generation AI chip Blackwell, Nvidia stated that it delivered samples of the Blackwell chip this quarter and made improvements to the product to enhance manufacturing efficiency.
In the fourth quarter, we expect Blackwell's revenue to reach billions of dollars, "said Colette Kress, Chief Financial Officer of NVIDIA
However, Nvidia expects that the current generation of chips called Hopper will increase total shipments in the next two quarters. Huang Renxun, founder and CEO of Nvidia, said, "The demand for Hopper remains strong, and the expectations for Blackwell are incredible. As global data centers are fully modernizing their entire computing stack through accelerated computing and generative artificial intelligence, Nvidia has achieved record revenue
During the conference call after the financial report, Huang Renxun confirmed that Blackwell chips will begin mass production and shipping in the fourth quarter.
Investors were once concerned about issues with Blackwell's chip design, and Huang Renxun stated that there was no need for functional changes to Blackwell.
Nvidia also expects an increase in shipments of the current generation GPU, the Hopper chip, in the next two quarters. Huang Renxun stated in a press release that the demand for Hopper chips remains strong, and people's expectations for Blackwell chips are also unbelievable.
Morgan Stanley believes that whether Nvidia's Q3 revenue guidance meets market expectations may not have a significant impact on the stock. What really affects the stock is whether the company can alleviate investors' concerns about Blackwell delays that may be caused by chip design adjustments. Earlier this month, The Information reported that the company is facing production issues that may delay a large number of shipments until the first quarter of 2025.