Nvidia Stock Jumps 7.25% as Strong Earnings Challenge AI Bubble Fears
Nvidia shares jumped by around 7.25% in premarket trading on Thursday, following the company’s strong quarterly report that challenges the AI bubble narrative.
Nvidia reported revenue of $96.2 billion for its fiscal second quarter, more than doubling its revenue compared to the same quarter last year, with the company’s data center division generating $89 billion of that revenue.
What’s more, Nvidia also shared that it expects revenue to reach $108 billion during this quarter, and the management also forecasted an astronomic 70% revenue growth for the fiscal year ending in January 2028, with WallStreet analysts previously expecting a growth of around 44%.
This unusually strong long-term forecast and extraordinary growth eased concerns about the potential slowdown in AI investments and the company’s inability to satisfy the demand for its chips.
“70% growth supply constrained is a remarkable figure,” Morgan Stanley analysts said following the earnings report. “We think there is a good chance they find ways to remove constraints over the course of the year.”
Nvidia was more optimistic about the underlying demand, with the company’s CFO Collete Kress saying that customer forecasts indicate that Nvidia could grow even faster if it produces enough chips to meet demand.
“Incredibly, we are seeing demand acceleration even at our scale. Customers' forecasts point to our growth doubling next year,” Kress said. “However, as I mentioned earlier, we expect to grow approximately 70% as we are supply-constrained.”
CEO Jensen Huang reinforced that point during the earnings call, arguing that the company's biggest problem is currently supply rather than demand.
“At this moment, we have supply for 70%. We have more supply than 70%, but about 70%,” Huang said. “Our demand is much higher than that, and we've got to go work hard, or we're going to be disappointing customers.”
This indicates that there is currently no slowdown or cutting of spending among Nvidia’s biggest partners, like Meta, Amazon, OpenAI and other hyperscalers.
On the contrary, the demand is growing faster than Nvidia can currently supply its chips, especially with the shortages of memory and other components which is currently limiting production.
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