On Wednesday, Nvidia Corporation (NASDAQ:NVDA) reported better-than-expected second-quarter results. Still, shares dipped in after-hours trading as Wall Street analysts said investors may be missing the chipmaker's longer-term AI growth story.
Blowout Quarter With Strong Guidance
Nvidia posted second-quarter revenue of $46.74 billion, a 56% year-over-year increase, beating Wall Street's estimate of $46.02 billion. Adjusted earnings per share came in at $1.05, ahead of analyst expectations of $1.01, while non-GAAP gross margins reached 72.7%.
For the October quarter, Nvidia projected revenue between $52.92 billion and $55.08 billion, versus a consensus estimate of $52.96 billion.
The guidance excludes any contribution from H20 chip shipments to China.
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Analysts See AI Demand Surging Despite Stock Drop
Shares fell 3.14% to $175.90 in after-hours trading, after it gained 3.81% in the last five days, according to data from Benzinga Pro.
However, Wedbush analyst Dan Ives said the results and outlook reaffirm Nvidia's leadership in AI infrastructure.
"This is a robust quarter and guide from Nvidia," Ives wrote on X, formerly Twitter. "Especially when considering not factoring in China H20 revs. Demand massive for Nvidia AI chips and not slowing down."
Deepwater Asset Management's Gene Munster said the Street is underestimating Nvidia's growth trajectory.
In a post on X, he said, "Bottom line is the guide is a modest q/q deceleration, but less slowdown than feared heading into earnings."
In a post-earnings video, Munster noted that adjusted guidance beat whisper numbers and highlighted CEO Jensen Huang's comments suggesting Nvidia's China business could eventually represent $50 billion annually and grow at 50%.
“He (Huang) thinks that if they could sell fully into China, this would be a $50 billion year business for them. They’re going to do about $250 billion next year,” he stated.
"My read is China’s probably growing a little bit faster than the rest of the world, but Jensen thinks that they’re going to grow next year between 40 and 50%," Munster said. "That’s a pretty big jump. And something doesn’t really jive here because when you look at it from that perspective, that’s further evidence that the stock could be up."
CNBC's Jim Cramer also weighed in, repeating his long-held advice: "Own it, don't trade it."
In July, Cramer said Nvidia was the U.S.'s "only bargaining chip" with China, underscoring its geopolitical importance and dominance in generative AI, robotics and autonomous vehicles.
Benzinga's Edge Stock Rankings indicate that NVDA continues to show strong upward price trend across short, medium and long-term trends, with more performance insights available here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
