Nvidia defies AI slowdown fears, posts record quarterly revenue and forecasts further growth

Nvidia, the dominant force in AI semiconductors, has once again achieved record-breaking quarterly results, reporting revenue of $96.221 billion for its fiscal second quarter (May-July). This figure represents a staggering 106% increase compared to the same period last year and an 18% rise from the previous quarter, marking the 13th consecutive quarter of record-breaking performance. The company's results significantly surpassed Wall Street's expectations, which had projected revenue between $92.2 billion and $92.3 billion.

The company's data center division, fueled by the insatiable demand for AI chips, was the primary engine of this growth. This segment alone generated $89 billion in revenue, up 117% year-over-year and 18% sequentially, accounting for an impressive 92% of Nvidia's total revenue. "AI has reached an inflection point," stated Nvidia CEO Jensen Huang. "Tokens are productive and profitable. Computing is now revenue."

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AI has reached an inflection point. Tokens are productive and profitable. Computing is now revenue.

Looking ahead, Nvidia expressed strong confidence in continued growth, forecasting revenue for the next quarter to reach $108 billion, a 12% increase from the current quarter. This projection suggests the company anticipates sustained demand for its AI-powered hardware, effectively defying market concerns about a potential "AI peak out."

However, rising memory chip costs present a potential headwind. While Nvidia maintained a high gross profit margin of 75% in the second quarter, it anticipates this figure to decline to 71-72% by the fourth quarter, with a modest recovery to 72-73% expected next year. CFO Colette Kress noted that memory prices are increasing more than anticipated, impacting profitability. To mitigate this, Nvidia plans to work closely with memory suppliers and has reportedly informed key customers of a price increase of over 15% for AI servers, expected to take effect with shipments in early next year.

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Memory prices have risen more than expected and will continue to rise next year.