Imagine you’re sitting at a poker table. The tension is palpable as you consider your next move. The outcome from the next hand will be the result of a blend of strategy, psychology and chance.
This what many investors experience every earnings season, too. After careful planning and execution, earnings season is the time when companies finally put their cards on the table for all the world to see. Companies that top estimates and provide positive forward-looking guidance tend to rake in the chips, while companies that miss and/or offer a weak outlook see their stocks fold.
This week, the stakes couldn’t have been higher for the company that has been running the table for quite a while now: NVIDIA Corporation (NVDA).
Now, much of NVIDIA’s run lately of better-than-expected sales, earnings and guidance has been thanks to its older artificial intelligence chips, namely the Hopper H100 graphic processing unit (GPU). However, the company is now making the transition to its new AI chip, the Blackwell GB200 GPU. Unfortunately, there have been reports that the new chip could be delayed by at least three months.
As a result, Wall Street was eager for the company to release guidance on the delivery of its Blackwell GB200 GPUs and order backlog. In fact, I predicted that this would likely be even more important than the company’s actual second-quarter sales and earnings results.
So, with the rumors spreading and tensions mounting, the question on folk’s minds is… Can NVIDIA deliver another jackpot performance?
In last Friday’s Market 360, I previewed what analysts were expecting from the company’s latest earnings report. Well, NVIDIA just showed their latest hand yesterday after the market closed. So, in today’s Market 360, I’ll deal out the details of NVIDIA’s latest financial results, discuss whether it was another winning hand or just a bust… and if it’s still a good buy.
Let’s Look at The Numbers
NVIDIAdid release better-than-expected results for its second quarter in fiscal year 2025 yesterday evening.
Second-quarter revenue soared 122% year-over-year to a record $30.0 billion, which topped estimates for $25.64 billion. Data center revenue also set a new record, jumping 154% year-over-year to $26.3 billion. Company management commented, “NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.”
Second-quarter earnings surged 152% year-over-year to $16.95 billion, or $0.68 per share, compared to $6.74 billion, or $0.27 per share in the second quarter of 2024. The consensus estimate called for earnings of $0.64 per share, so NVIDIA posted a 6.3% earnings surprise.
What’s more, company management guided for revenue of around $32.5 billion in the third quarter. That’s up 103% from $16.00 billion in the third quarter of fiscal year 2024 – and better than analysts’ expectations for $31.9 billion.
But investors were clearly looking for even stronger results, and the stock opened 3.4% lower this morning.
Now, it’s certainly disappointing that NVIDIA’s shares pulled back today despite beating expectations and providing solid guidance. But the reality is that NVIDIA has a history of posting big earnings surprises, and investors clearly had lofty expectations for the latest quarterly results. For example, in the first quarter, NVIDIA posted a 5.5% revenue surprise and a 9.5% earnings surprise.
Blackwell Chips in High Demand
Fears of production snafus for its new Blackwell chips continue to weigh on the stock. But the Blackwell chip is coming, and there are unbelievably huge orders for it.
Alphabet Inc. (GOOGL), Meta Platforms Inc. (META) and Microsoft Corporation (MSFT) are all betting billions on NVIDIA’s GPUs as the AI arms race escalates. As an example, Google has already ordered more than 400,000 Blackwell GB200 chips, which is an order worth more than $10.0 billion. Meta has also placed a $10.0 billion order, and Microsoft is expected to have between 55,000 and 65,000 GB200 GPUs ready for OpenAI by the first quarter of 2025.
When it comes to the delivery of these chips, Chief Financial Officer Collette Cress took time to address the matter during the company’s earnings call. She stated that “Blackwell is widely sampling.” Regarding the rollout, she said:
Blackwell production ramp is scheduled to being in the fourth quarter and continue into fiscal year 2026. In Q4, we expect to get several billion dollars in Blackwell revenue… Demand for Blackwell platforms is well above supply, and we expect this to continue into next year.
So folks, right now, NVIDIA is making all this money on its old chips. But when the Blackwell chip rolls out, I’m sure it will cause its sales to explode. It’s going to be very exciting and we’re probably going to hit overdrive on the AI boom when those chips come out.
Jackpot Earnings or Just a Bluff?
The bottom line: NVIDIA delivered another winning hand and remains a great company with plenty of potential upside. And I’m happy as it gets, folks.
I recommended NVIDIA to my Growth Investor subscribers in May 2019, and I am proud to say the position has delivered a gain of just under 2,800%.
It is also important to mention that NVIDIA’s competitors are making lower-grade AI chipsets. So, to effectively compete with NVIDIA, its competitors would have to spend several billion dollars over the next several years, which would likely prove to be a futile exercise.
In other words, I fully expect NVIDIA to remain the leader of the pack in the AI race. As a result, I plan to hold NVIDIA for several more years as this great company is truly a “once-in-a-lifetime” stock that can transform both your portfolio and lifestyle!
So, if you haven’t opened a position in the stock yet, today’s dip is your opportunity to back up a truck and buy all you want.
Now, while NVIDIA continues to run the tables, it’s not the only company that will benefit from artificial intelligence. In fact, NVIDIA’s CEO predicts a $1 trillion shift taking place in the tech world, and it could create an entirely new set of winners. And this new set of AI stocks could take off on or before November 5.
a new set of AI stocks that could take off on or before November 5.
I’ll admit, my latest prediction may be a bit controversial. But I have an obligation to tell my readers about profit opportunities in the market, plain and simple.
In short, my prediction has to do with former President Donald Trump – and how, if elected, he could usher in a Second Wave of the AI Boom.
As the election draws near, you’ll want to be prepared. Because a small subset of AI stocks are on the verge of massive gains.
Go here to learn more about my controversial prediction now.
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
