Key facts
- Nvidia reported strong second-quarter results, exceeding Wall Street estimates.
- The company projects $108 billion in revenue for the current quarter.
- Data center revenue increased 117% year-over-year, reaching $89.0 billion.
- Nvidia expects its gross margin to decrease in the coming year due to "extreme" memory costs.
- The company anticipates gross margin to be 74% +/- 50 basis points for the current quarter, before settling at 72-73% in the next fiscal year.
Nvidia reported strong second-quarter results that surpassed Wall Street estimates, projecting $108 billion in revenue for the current quarter and signaling continued growth in the AI sector. The chipmaker's data center segment revenue surged 117% year-over-year to $89.0 billion, exceeding analysts' expectations.
Despite the robust performance, Nvidia warned investors that "extreme" memory costs are impacting its gross margin. The company expects its gross margin to decrease in the coming year, settling at 72-73% after a projected 71-72% in the fourth fiscal quarter. For the current quarter, Nvidia anticipates a gross margin of 74%, with a 50 basis point margin for error.
During the earnings call, Nvidia's CFO Colette Kress defended the company's investment deals with customers, which some have labeled as "circular financing." CEO Jensen Huang addressed questions about scaling compute power and the increasing demand driven by AI models, stating that both open and closed AI models contribute to Nvidia's sales. Huang also highlighted that Nvidia's work with hyperscalers like Microsoft Azure and AWS represents only half of its business, emphasizing the value added to specialized firms. He further distinguished Nvidia's platform approach from competitors like OpenAI's custom inference chip.