Earnings Figures Comprehensively Exceeded Wall Street Expectations
Nvidia's second-quarter revenue reached $96.22 billion, with adjusted earnings per share at $2.22, both surpassing Wall Street estimates. Market expectations compiled by Visible Alpha were for revenue of $92.37 billion and earnings per share of $2.10. The company's third-quarter revenue guidance is $108 billion, also exceeding analyst consensus.
After the earnings release, Nvidia's stock price first fell and then rose. Earlier concerns primarily revolved around the financial health and duration of AI infrastructure investments; subsequently, the demand, supply, and new product information provided by management during the conference call reinforced the growth narrative. The stock fell 1.6% during the regular trading session, closing around $210, and then turned positive in after-hours trading.
Vera Rubin Orders Cover Major Customers
CFO Colette Kress stated that Vera Rubin, the successor to Blackwell, has had a strong start, with orders already secured from "every major hyperscale cloud provider, AI cloud, and systems OEM." The platform began shipping for production earlier this month. Nvidia expects Vera Rubin to be the fastest-ramping product in the company's history, contributing about 20% of data center revenue in the current quarter.
This information alleviated some investors' concerns about a potential demand gap during the product transition. If Rubin ramps up as planned quickly, there will not be an immediate demand cliff following Blackwell's growth; Nvidia's revenue growth will be sustained by the new platform.
Management Expects ~70% Revenue Growth Next Fiscal Year
Kress indicated the company expects revenue growth of approximately 70% next fiscal year, though supply bottlenecks persist due to shortages of memory components. Jensen Huang further stated that actual demand far exceeds this level, and the company requires assistance from the entire supply chain to increase supply.
Technical analyst Luke Lango believes that Nvidia's revenue growth rate decelerating from 106% to around 70% does not mean the investment thesis is broken. Maintaining such a pace at a market capitalization exceeding $5 trillion remains remarkably strong. The market's initial cautious reaction stemmed more from investors' hopes for even higher growth rates and larger positive surprises.
Gross Margin and Financing Model Remain Risk Points
The second-quarter gross margin was 75%, in line with market expectations, but the company anticipates the current quarter's gross margin to decline to 74%, plus or minus 0.5 percentage points. Concurrently, operating expenses increased by 55% year-over-year. If memory costs, supply constraints, or product transition expenses continue to rise, profit margins could become a trigger for the next round of stock price volatility.
The market is also paying attention to the $500 billion financing platform established by Nvidia with institutions like Apollo, BlackRock, Blackstone, Goldman Sachs, and KKR. Some investors are concerned that Nvidia's practice of financing customers' chip purchases could create circular financing. Bulls, however, argue that the useful life and economic value of GPU infrastructure are higher than previously judged by the market, making it a viable asset for financing.
From a market perspective, the key to the after-hours reversal was not merely the current quarter's "beat," but rather the Rubin orders, the ~70% growth expectation for the next fiscal year, and management's remarks that "demand exceeds supply." In the short term, if the stock price stabilizes above the post-earnings high, the market will continue trading on the expansion of AI capital expenditures. If gross margins decline, financing controversies intensify, or supply bottlenecks impact deliveries, the post-earnings gains could also be quickly erased.
