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Nvidia delivered strong second-quarter earnings on Wednesday — but that wasn't enough to satiate the sky-high expectations of some on Wall Street.

The company's stock, which is known to fluctuate significantly in the wake of its earnings, was down more than 5% in after-hours trading after the company failed to meet the highest of analysts' expectations for Q3 revenue guidance.

But the company demonstrated that AI spending is still going strong.

The chipmaker notched $30.04 billion in revenue for the past quarter, outpacing consensus estimates of $28.86 billion. However, it was a slimmer revenue beat than recent quarters.

The company also beat estimates for guidance, reporting it expects about $32.5 billion in Q3 revenue, compared to average estimates of $31.77 billion.

However, that Q3 revenue forecast failed to meet some of the loftiest expectations for the third quarter, or the Wall Street "whisper number" that some analysts hoped the company would hit. Dan Morgan, an investor at Synovus, said the Wall Street whisper number was $33 billion to $34 billion.

Anticipation has been high for Nvidia's earnings, as the firm has essentially become a bellwether for the wider AI industry.

The big question on everyone's mind was the status of the much-anticipated Blackwell chips, the next generation after the Hopper GPUs that tech companies have been clamoring to get their hands on. Recent reports of a potential delay in Blackwell's rollout drew concerns over the possible industry impact.

Nvidia CEO Jensen Huang said Blackwell demand was "incredible" and the company said it expected to ship "several billion" in revenue from sales of the new chip architecture in its fiscal Q4. But it also acknowledged that production problems related to Blackwell impacted gross margins in the past quarter.

"We shipped customer samples of our Blackwell architecture in the second quarter," Nvidia's CFO said in prepared remarks.

"We executed a change to the Blackwell GPU mask to improve production yield," she added. "Blackwell production ramp is scheduled to begin in the fourth quarter and continue into fiscal 2026."

Huang said demand continued to be "really strong" for Nvidia's existing Hopper chips, and that AI companies were looking to deploy their capital and build out their data centers now with what was currently available.

While fielding questions from analysts, Nvidia's CEO said that the company is seeing the "momentum of generative AI accelerating."

That's a wrap! Huang ends the call with closing remarks and a summary of his five main takeaways.

In addition to emphasizing Hopper's continued demand, Huang highlights the top takeaways of the call before signing off.

His points include that the chipmaker is on its journey to modernize a trillion dollars worth of data centers from general-purpose to accelerated computing.

He also reminds analysts that Blackwell is an AI infrastructure platform, not just a GPU, and highlights its performance gains over Hopper.

Huang mentions the importance of NVLink, which is vital for low latency, high output, and large language models.

Huang also briefly discusses the rapid acceleration of generative AI and how it's evolving into different modalities. He mentions how Nvidia can assist different businesses with AI developments and ends the call.

The stock is still trading down more than 5% as the call concludes.

Nvidia's CEO fields a final question from analysts.

Huang talks up Nvidia's approach to the Blackwell system rack, and the various configurations it comes in, and the logistics hubs the company has scaled out with partners to make sure it can meet customers' specific demands for their data centers.

Demand for Hopper is expected to continue, but it's not clear how much.

Kress says Hopper will continue to grow in the second half of the year, but isn't giving exact estimates on what's expected in the third or fourth quarter.

Revenue from the beginning of Blackwell's rollout will be on top of that in Q4.

So far, the executives' statements haven't been able to push the stock out of the red in after-hours trading.

The stock is still trading down more than 5% in after hours trading midway through the earnings call.

Huang talks about why Hopper demand is still high as Blackwell rollout approaches.

Huang says demand for Hopper is "really strong" while demand for Blackwell is "incredible."

Nvidia's CEO says gen AI companies spend the vast majority of invested capital into infrastructure, and these companies "need it now" — that's where Hopper chips come into play, as they're available now.

So while interest in Blackwell and its ramp is high, standing up Blackwell's capacity is still weeks or months away, and the Hopper series is there to catch immediate demand.

Nvidia's CFO talks about the increase in sovereign AI revenue.

Kress said "there's more and more excitement" around AI models and what they can offer to different countries.

Nvidia's CEO explains what’s happening with gen AI right now.

Huang does a brief dive into the state of gen AI following a question about how Nvidia is measuring customer return and how that impacts its capital expenditures.

"We're seeing momentum of generative AI accelerating," Huang says.

He mentions that frontier models are growing at a substantial rate and the industry is seeing the benefits of scaling.

To meet demand, Nvidia has to continue to drive down energy consumption and costs, the CEO says.

Huang says the change to the Blackwell GPU mask is complete.

"There were no functional changes necessary," Huang said, reiterating that Blackwell production is expected to start in the fourth quarter.

It's time for analysts' questions.

Questions from analysts have begun. The first question is about any other changes to the Blackwell system.

The CFO expects China to be a very competitive market going forward.

Kress says data center revenue from China remains below previous levels due to export controls.

But data center revenue in China still grew sequentially in the second quarter and acted as a "significant contributor" to its total data center revenue, the CFO says.

The earnings call has kicked off!

Nvidia CEO Jensen Huang is on the call. CFO Colette Kress kicks off the call and begins delivering prepared remarks. The executives will field questions from analysts shortly.

Expect analysts to press for more on expected Blackwell Q4 sales.

Nvidia said it began shipping customer samples of its Blackwell architecture in Q2 and expects production to ramp up in Q4 and into the following year.

But analysts will likely try to needle in on the expected "several billion dollars in Blackwell revenue" the company expects in the fiscal fourth quarter, looking for additional color from executives on how big or small that number could be.

Emarketer analyst reacts to results.

Emarketer technology analyst Jacob Bourne tells BI that Nvidia continues to benefit from Big Tech's investment in AI, which is fueling "massive demand" for Nvidia chips even as some of these companies work to develop their own rival chips.

"Nvidia once again delivered spectacular results, beating expectations with margins that rival its previous blockbuster quarters," Bourne said. "Despite growing economic uncertainties and AI bubble concerns."

Bourne added that the release of Nvidia's Blackwell chip will remain key in its continued dominance as companies like AMD ramp up their efforts to compete in the chipmaking arena.

Nvidia's CFO says production problems with the company's new Blackwell chip were partly responsible for a dip in gross margin.

Gross margins, a common measure of profitability in the chip business, declined from the first quarter of 2024 to the second quarter.

That was "primarily driven by inventory provisions for low-yielding Blackwell material and a higher mix of new products within Data Center," the CFO writes in the earnings release.

The stock slides in after-hours trading after the Q3 revenue forecast fails to top the most sky-high of analysts' expectations.

Nvidia forecast third-quarter revenue of roughly $32.5 billion. That was below some of the unofficial bullish estimates on Wall Street, known as "whisper" numbers.

Ahead of Wednesday's results, Dan Morgan, an investor at Synovus, said the Wall Street whisper number was $33 billion to $34 billion.

Nvidia beats 2nd quarter revenue and earnings-per-share estimates, but sales outlook for Q3 didn't surpass the highest of expectations.

2nd quarter

Revenue: $30.04 billion, estimate $28.86 billion

Adjusted gross margin: 75.7% , estimate 75.5%

Wedbush's Dan Ives touts Nvidia's earnings as this year's most important report.

Wedbush Securities' Dan Ives said now is the time to grab the popcorn, as Nvidia's earnings should blow Wall Street estimates out of the water.

The tech bull predicted that Nvidia will deliver another "drop the mic" performance, as appetite for its hardware is stronger than ever.

In his view, previous sector earnings indicate that AI demand has not dissipated, spurring upside for Nvidia.

"The cloud numbers and AI data points from Redmond, Amazon, and Google were very strong during earnings season the last few months as this indicates massive enterprise AI demand is now underway," he wrote in a new note on Wednesday.

Wedbush estimates that for each $1 spent on a Nvidia chip, there's a $8-$10 multiplier across the tech sector.

"We believe this is the most important earnings report for the stock market this year and potentially in years for the Street as Nvidia will be the earnings report heard around the world," Ives wrote.

Wedbush holds an "outperform" rating on Nvidia.

Deutsche Bank expects earnings strength as AI demand remains high.

Nvidia's earnings will mirror past quarter to deliver another estimate-beating report as AI computing demand remains intact, Deutsche Bank analyst Ross Seymore wrote.

"While on the margin some may be paring back orders ahead of the launch of Blackwell, we still expect aggregate demand trends to remain healthy," he wrote.

The bank cited Nvidia's technology roadmap as one reason for Wall Street to expect further guidance strength from the firm. However, Seymore noted that shares in the company are already fully valued, as investors are well acquainted with Nvidia's fundamentals at this point.

Deutsche maintains a "Hold" rating on the firm.

Citi says Nvidia's earnings could fail to live up to the past four quarters.

Citi said Nvidia's earnings will fall short of the $2 billion estimate beat it achieved over the previous four quarters, given that the potential Blackwell hold-up could impede the firm's performance.

However, the bank still anticipates that Nvidia will outpace Wall Street forecasts by around $1 billion. Total quarterly sales should reach $28.5 billion, Citi said.

Citi analysts predict that consensus estimates will reach higher for the upcoming quarter, as Blackwell comments from Nvidia should reassure investors about a strong outlook for the next calendar year. Post-earnings, Nvidia's stock is likely to reach fresh 52-week highs.

Aside from Blackwell's possible delay, investors will seek guidance on Hopper demand, AI enterprise demand, and updates on Nvidia's ethernet-based networking product, Spectrum X. They will also seek comments on sovereign AI risk and Chinese GPU restrictions, Citi said.

Citi maintains a "Buy" rating on Nvidia with a target price of $150 per share.

Bank of America warns Nvidia earnings may be an underpriced risk.

According to Bank of America, there is a possibility that Nvidia's report underwhelms bullish investors.

"NVDA results have been a key driver of equity indices, and investors may be underpricing the risk of a disappointment," analysts wrote, suggesting that S&P put options are a good trade to hedge against this outcome.

That's likely as the Blackwell delay could mute near-term upside, the bank said in an earlier report.

However, this issue will more likely test third-quarter results, and Nvidia has ways to dampen any negative impact before then, BofA added. For instance, the firm could rely on larger Hopper chip shipments to make up for the Blackwell supply crunch.

"We see any selloff as enhanced buying opportunity as challenges are not in demand, but in (solvable) supply that will not fundamentally derail NVDA's longer-term momentum," the note said.

Strong Hopper demand this quarter should bolster sales to $28.6 billion, the bank said, outpacing Nvidia's $28 billion guidance.

Bank of America has a "Buy" rating on Nvidia and a price target of $150 per share.

Goldman Sachs sees AI demand staying strong, fueling another big quarter.

Goldman analysts led by Toshiya Hari expect Nvidia's revenue and earnings-per-share to beat estimates, as the firm's fundamentals will support more upside.

Strength will come from data center revenue and the company's strong operating leverage, Goldman said. Meanwhile, the bank cited that Nvidia's hardware is still sought after by leading cloud service computers, and the firm maintains its competitive lead in the AI computing sector.

For investors concerned that AI spending has not yet yielded meaningful results, Nvidia's earnings should combat this narrative, Goldman said.

"We expect Nvidia management to provide ROI metrics available from select customers on this upcoming earnings call as a way to instill confidence in investors," Hari wrote.

However, investors should anticipate some immediate volatility, Hari wrote, given the Blackwell chip delay.

But this will be a short-term headwind, and Nvidia does not lack solutions. The impact will depend on three factors: the delay's extent, whether customers are willing to take on the older Hopper chip, and Nvidia's capacity to ramp up production of a simplified Blackwell model.

Goldman holds a "Buy" rating on Nvidia and a price target of $135 per share.

Nvidia's 2nd-quarter consensus revenue estimate is $28.86 billion.

SECOND QUARTER

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