Nvidia delivered the final word on the AI trade this earnings season — “resetting expectations” as it warned investors the memory shortage was biting into its gross margin.
The tech titan delivered second-quarter results on Wednesday that topped Wall Street estimates. The company expects the AI party to continue, projecting $108 billion in revenue for the current quarter, above the $104.57 billion expected by analysts. Nvidia expects its fiscal 2028 revenue to grow around 70% year over year, even as it warned supply is expected to remain bottlenecked.
The stock slipped 2% after hours immediately following the results, but rose 4% as the earnings call progressed.
The chip maker’s all-important data center segment brought in $89.0 billion compared to analysts’ estimates of $85.83 billion. That’s up 117% year over year.
Nvidia’s closely watched gross margin was in line with estimates at 75% — but, as some investors feared, the chip-maker expects that to decrease in the coming year.
Nvidia warned on its earnings call that memory costs are “extreme” and surpassed even its own expectations, and, as a result, it was “resetting expectations today.”
For the current quarter, the company expects its gross margin to be 74%, plus or minus 50 basis points, but a bottoming out to 71- 72% in fiscal Q4 before settling at 72-73% in the coming fiscal year as chip price hikes go into effect.
The chip-maker’s CFO pushed back on criticism of its investment deals with customers. “We recognize the scale of this support, and we know some will call this circular financing,” Colette Kress says. “We see it differently.”
Scroll on for a full play-by-play of Nvidia’s earnings call:
