Nvidia stock slips after earnings, forecasts top estimates amid 'incredible' demand for its next-gen chip

AI juggernaut Nvidia (NVDA) reported second quarter earnings after the bell on Wednesday that beat expectations on the top and bottom line, while its forecast for the current quarter also came in ahead of expectations.

Nvidia reported adjusted earnings per share of $0.68 on revenue of $30 billion in its fiscal second quarter. Analysts were expecting EPS of $0.64 and revenue of $28.8 billion. That marks a 122% increase on the top line from a year ago; earnings rose 168% from the same quarter last year.

The company also provided third quarter revenue guidance of $32.5 billion plus or minus 2%. Analysts were looking for $31.9 billion.

Shares of the chip giant were down about 3% in pre-market trading on Thursday following the results. The stock fell as much as 6% in immediate reaction to the numbers.

The bulk of that revenue came from Nvidia’s all-important data center business, which brought in $26.3 billion in the quarter versus Wall Street’s expectations of $25 billion in revenue. That’s a 154% increase from the same period last year when the segment brought in $10.3 billion.

In a statement, CEO Jensen Huang said anticipation for the company’s next-generation Blackwell chip is “incredible.”

CFO Colette Kress said in a statement, “Blackwell production ramp is scheduled to begin in the fourth quarter and continue into fiscal 2026. In the fourth quarter, we expect to ship several billion dollars in Blackwell revenue.”

Kress’s statement added that the company “executed a change to the Blackwell GPU mask to improve production yield.”

The company expects shipments of its current Hopper chips to “increase” in the second half of the year.

Nvidia also announced Wednesday a $50 billion increase in its share buyback authorization. The company had $7.5 billion remaining on its existing authorization at the end of the quarter.

Nvidia’s gaming division, which used to stand as the company’s breadwinner, saw revenue of $2.8 billion up 16% year over year.

Nvidia is the world leader in AI chip design and software, controlling between 80% and 95% of the market, according to Reuters.

The company has also been key to the current AI trade on Wall Street, with almost half of its revenue tied directly to tech giants like Microsoft, Amazon, Google, and Meta.

Nvidia’s rivals aren’t resting on their laurels. Earlier this month, AMD announced it is acquiring ZT Systems in a deal valued at $4.9 billion. The move gives AMD more firepower to build out AI system servers, something that’s been a major catalyst for Nvidia’s own sales.

And while it could provide AMD with a boost in sales, it doesn’t mean Nvidia will face any major threats to its reign as the AI king anytime soon.

“There are emerging competitors like AMD that are starting to take a little bit of market share,” Stifel managing director Ruben Roy told Yahoo Finance Monday. “But when you look at the overall infrastructure spend cycle … which we think is going to continue to increase, Nvidia appears to us as the best positioned to benefit from [spending].”