Nvidia reports 88% jump in revenue and tops estimates, driven by demand for AI chips

Nvidia shares climbed 8% in extended trading on Wednesday after the chipmaker beat estimates for the second quarter and issued optimistic guidance for the current period.

• Earnings: $2.70 a share, adjusted, versus $2.09 per share expected by Refinitiv.
• Revenue: $13.51 billion versus $11.22 billion expected by Refinitiv.

Nvidia said it expected third-quarter revenue of about $16 billion, higher than $12.61 billion forecast by Refinitiv. Nvidia’s guidance suggests that its sales will grow 170% on an annual basis in the current quarter.

Net income jumped to $6.19 billion, or $2.48 a share, from $656 million, or 26 cents, a year earlier.

Nvidia’s strong sales and forecast for the third quarter underscores how central the company is for the generative AI boom. Nvidia’s A100 and H100 AI chips are needed to build and run AI applications like ChatGPT, and they are selling well.

“A new computing era has begun,” CEO Jensen Huang said in the press release. “Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”

Even before Wednesday’s report, Nvidia’s stock price had more than tripled for the year, making it the top performer in the S&P 500. It jumped past $507 after hours, a level that would mark a record if it closes there on Thursday. Its prior closing high was $474.94 on July 18.

Nvidia’s performance was driven by its data center business. Nvidia reported $10.32 billion in data center revenue, which was up 171% on an annual basis.

Nvidia’s now-smaller gaming business grew as well, rising 22% on an annual basis to $2.49 billion.

Here’s how Nvidia’s two most important lines of business did versus expectations:

• Gaming: $2.49 billion, versus $2.38 billion in revenue expected according to StreetAccount.
• Datacenter: $10.32 billion, versus $8.03 billion in revenue expected, according to StreetAccount.

Nvidia also makes chips for high-end graphics applications, and the business shrunk 24% year-over-year to $379 million. It reported $253 million in automotive revenue, which grew 15% on an annual basis.

Nvidia said its board of directors had authorized $25 billion in share buybacks.

Executives will discuss the results on a call with analysts at 5 p.m. ET.