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Nvidia Corp., the chipmaker at the heart of the artificial intelligence boom, delivered a sales forecast that fell short of the highest estimates, adding to investor concerns that AI spending is poised for a slowdown.
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Revenue in the current period will be US$108 billion, plus or minus two per cent, the company said in a statement Wednesday. Though analysts had estimated US$105.2 billion on average, some projections exceeded US$110 billion, according to data compiled by Bloomberg.
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Shares of the company fell about one per cent in late trading after the report was released.
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The tepid reaction to a generally strong outlook underscores the skepticism around the AI frenzy. After years of runaway growth, some investors have become concerned about a potential bubble. Nvidia’s myriad investment pacts with companies in the AI economy also have sparked fears that circular deals will leave the industry on shakier ground.
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“Even extraordinary growth can fail to satisfy investors as scrutiny of AI spending and its financing intensifies,” Emarketer analyst Jacob Bourne said in a note.
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In the report, Nvidia chief executive Jensen Huang said demand is only accelerating. He also touted the rollout of the company’s latest chip line, Vera Rubin.
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“The AI infrastructure build-out is at full steam,” he said. “Vera Rubin, now in full production, was built to power exactly this moment.”
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Nvidia, the world’s most valuable company, is the leading provider of AI accelerators, a key component for training and running artificial intelligence models. That status has turned its quarterly earnings into a barometer on the state of the broader industry.
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Gross margin, the percentage of sales remaining after deducting the cost of production, will be roughly 74 per cent in the current quarter.
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In the second quarter, which ended July 26, sales more than doubled from a year earlier to US$96.2 billion. Profit was US$2.22 a share, excluding certain items. Analysts had projected revenue of US$92.5 billion and earnings of US$2.09 a share.
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Nvidia’s all-important data center division had revenue of US$89 billion, compared with an average estimate of US$85.8 billion. A group known as hyperscalers, which includes Amazon.com Inc. and Alphabet Inc.’s Google, accounted for much of those sales.
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Nvidia has sought to expand its customer base, aiming to show that it’s less dependent on a small group of tech giants for much of its sales.
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Investors, meanwhile, have gotten harder to impress. Nvidia has now delivered sales above Wall Street estimates for 16 quarters in a row. But that hasn’t always helped its stock, with shareholders taking its rapid growth and outperformance as a given. The stock has fallen the day after five of its last six earnings reports.
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