NVIDIA Posts Monster Earnings Again On Red Hot Blackwell Demand And Gaming Momentum
NVIDIA's second quarter earnings are in and they paint the same picture as the last several quarters, which is booming demand for AI chips and GPUs. Revenue for the latest quarter grew a modest 6% sequentially and a monstrous 56% year-over-year to $46.7 billion, while net income popped 41% sequentially and 59% year-over-year to $26.4 billion.
Those are the kinds of numbers that any company would love to flaunt, so why is NVIDIA's share price slightly down in pre-market trading hours? It's likely due to reservations over NVIDIA's ability to sustain big data center growth.
The data center is NVIDIA's biggest earner these days, having leapfrogged gaming a long time ago. In the second quarter, NVIDIA's data center division accounted for $41.1 billion in revenue, which is a 5% sequential gain and a sizable 56% year-over-year jump. However, Wall Street was expecting $41.3 billion, so it's a slight miss. Cue the reactionary investors and, if we had to guess, temporary stock decline.
Notably, NVIDIA says there were not an Hopper H20 chip sales to China-based customers in the second quarter. It did, however, benefit from a $180 million release of H20 inventory that was previously reserved for China, from approximately $650 million in unrestricted H20 sales to a customer outside of China.
It will be interesting to see what future quarters bring, in terms of H20 chip sales. NVIDIA and AMD both recently agreed to a unprecedented deal with the U.S. government to pay 15% of all revenues derived from AI chip sales to China, paving the way for NVIDIA to resume H20 sales in the region (and Instinct MI308 accelerators from AMD). It essentially amounts to an export licensing deal.
China-based sales aside, the data center remains a strong earner, with NVIDIA's Blackwell architecture leading the charge.
"Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap — production of Blackwell Ultra is ramping at full speed, and demand is extraordinary," said Jensen Huang, founder and CEO of NVIDIA. "NVIDIA NVLink rack-scale computing is revolutionary, arriving just in time as reasoning AI models drive orders-of-magnitude increases in training and inference performance. The AI race is on, and Blackwell is the platform at its center."
Demand for Blackwell chips applies to NVIDIA's gaming division too, which saw its biggest quarter ever. Gaming accounted for nearly $4.3 billion in the second quarter, which is up 14% sequentially and 49% year-over-year. NVIDIA attributed the gains to "strong sales and increased supply" of its Blackwell-based GeForce products.
This also reflects sales of the GeForce RTX 5060 that released in mid-May. NVIDIA says the GeForce RTX 5060 quickly became its fastest-ramping x60-class GPU ever.
Also of interest, NVIDIA recently announced a Blackwell infusion to its GeForce NOW cloud gaming service next month. During an earnings call, NVIDIA reiterated that this will be it the service's "most significant upgrade" since launch. It's also getting ready to double the number of games available, to 4,500 titles.
Finally, NVIDIA notched both sequential and year-over-year gains in every other category, including Professional Visualization ($601 million in Q2 revenue), Auto ($586 million), and OEM & Other ($173 million). To say NVIDIA is firing on all cylinders is an understatement.
Looking ahead, NVIDIA's earnings report indicates the company expects Q3 revenue to check in at $54 billion, plus or minus 2%. That doesn't take into account any possible H20 chip sales to China.
