5 days ago
Nvidia Shares Surge 9% After Forecasting 70% Sales Growth
Nvidia makes special computer chips that help artificial intelligence systems work.
The company said its sales could grow 70% next year.
This was much higher than the growth analysts had expected.
Investors liked the forecast, so Nvidia’s stock rose almost 9%.
Nvidia also reported that its sales more than doubled in the latest quarter.
Its data-center business brought in most of the money.
Big technology companies such as Amazon and Google are buying many of its chips.
Nvidia said demand is still very strong, although higher memory costs could reduce its profit margins for a while.
Nvidia forecast 70% sales growth for its next fiscal year, exceeding analysts’ 45% expectation.
The forecast sent Nvidia shares up 8.7% to $227.98, adding about $442 billion to its market value.
Second-quarter revenue more than doubled year-on-year to $96.2 billion, with adjusted earnings of $2.22 per share.
The data-center division generated $89 billion in revenue, above the $85.8 billion analyst consensus.
Nvidia expects current-quarter revenue of about $108 billion, while rising memory costs may pressure near-term margins.
- Who
- Nvidia, led by CEO Jensen Huang and CFO Colette Kress.
- What
- Nvidia reported stronger-than-expected results and forecast 70% sales growth for its next fiscal year.
- Where
- The articles do not specify a location; the business involves Nvidia’s global AI chip and data-center operations.
- When
- The report covered Nvidia’s second quarter and its outlook for the next fiscal year and current quarter.
- Why
- Demand for AI computing infrastructure and Nvidia’s specialized processors remains strong.
Investor Concerns
Nvidia’s Outlook
AI spending sustainability
Investor Concerns
Some investors have worried that the large spending cycle on AI infrastructure could be approaching a peak or resemble an investment bubble.
Nvidia’s Outlook
Nvidia executives said demand remains exceptionally strong, customers suggest growth could accelerate, and AI infrastructure construction is continuing at full pace.
Profit margins
Investor Concerns
Rising memory costs are expected to pressure Nvidia’s margins in the near term.
Nvidia’s Outlook
Nvidia expects margins to stabilize at approximately 72%-73% in fiscal 2028 despite the near-term decline.
Customer concentration
Investor Concerns
Nvidia remains dependent on a relatively small number of major technology companies, creating concentration concerns.
Nvidia’s Outlook
The company is working to broaden its customer base while demand from major cloud companies remains significant.
Key facts
- Next fiscal-year sales outlook
- 70% growth, compared with analysts’ expected 45% growth
- Share-price reaction
- Shares rose 8.7% to $227.98
- Market-value increase
- Approximately $442 billion in one session
- Second-quarter revenue
- $96.2 billion, more than double the year-earlier figure
- Data-center revenue
- $89 billion, above the $85.8 billion consensus estimate
- Current-quarter revenue forecast
- Approximately $108 billion, versus analysts’ $105.2 billion estimate
- Projected gross margin
- About 74% currently; expected to fall to 71%-72% in fiscal fourth quarter before stabilizing around 72%-73% in fiscal 2028
Sources
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