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Nvidia forecast a third-quarter gross margin on Wednesday (Aug 28) that could miss market estimates and revenue that was largely in line, failing to impress investors who have driven a dizzying rally in its shares as they bet billions on the future of AI.
Shares of the Santa Clara, California-based company were down 3 per cent in extended trading, trimming earlier losses. Nvidia’s stock, which closed the regular session down 2 per cent, has risen more than 150 per cent so far this year.
Nvidia expects an adjusted gross margin of 75 per cent, plus or minus 50 basis points, in the third quarter. Analysts on average forecast gross margin to be 75.5 per cent, according to LSEG data. It reported a 75.7 per cent gross margin in the second quarter versus an average estimate of 75.8 per cent.
Investors had lofty expectations from the chipmaker, following a more than seven-fold surge in Nvidia’s shares over the last two years – making it one of the biggest beneficiaries of a rally in AI-linked shares.
The company’s capacity to surpass estimates faces increasingly greater challenges as each success prompts Wall Street to raise its targets even higher.
The company forecast revenue of US$32.5 billion, plus or minus 2 per cent, for the third quarter, compared with analysts’ average estimate of US$31.77 billion, according to LSEG data.
Second-quarter revenue was US$30.04 billion, beating estimates of US$28.70 billion.
Sales in Nvidia’s data centre segment grew 154 per cent to US$26.3 billion in the second quarter ended July 28, above estimates of US$25.15 billion. From the first quarter, it increased 16 per cent.
“Based on the stock reaction, only a US$2billion beat was not enough for investors with high expectations,” said Kevin Garrigan, an analyst at WestPark Capital.
The company said it expects several billion dollars in revenue from its latest Blackwell chips in the fourth quarter, addressing widespread concerns of reported production delays hampering growth.
“Blackwell samples are shipping to our partners and customers,” CEO Jensen Huang said in a statement.