Nvidia's Q3 revenue outlook matches estimates, but shares dip

Nvidia's Q3 revenue: Nvidia's third-quarter revenue forecast has aligned with market predictions, but concerns over its gross margin estimates have led to a dip in its stock price. 

The company's projections indicate a gross margin of 75 per cent, with a potential variance of 50 basis points, slightly below analysts' average expectation of 75.5 per cent. For the previous quarter, Nvidia reported a gross margin of 75.7 per cent, just shy of the anticipated 75.8 per cent.

Following the announcement, Nvidia’s shares dropped by 3 per centin after-hours trading, compounding a 2 per centdecline from the regular session. Despite this, Nvidia's stock has surged over 150 per centthis year, reflecting the high investor confidence in its AI-driven future.

High hopes, falling shares

Investors had high hopes for Nvidia, given the chipmaker's seven-fold share surge over the past two years, fuelled by a boom in AI-linked stocks.

However, the company’s forecast for third-quarter revenue, set at $32.5 billion with a 2 per cent variance, aligns closely with analysts’ average estimate of $31.77 billion but fell short of the elevated expectations set by its recent performance. 

Nvidia's second-quarter revenue of $30.04 billion exceeded estimates of $28.70 billion, and its data centre sales soared by 154 per cent to $26.3 billion, surpassing the projected $25.15 billion.

Despite these strong figures, Nvidia's shares dropped 3 per cent in after-hours trading, following a 2 per cent decline during the regular session. 

Kevin Garrigan, an analyst at WestPark Capital, commented, "Based on the stock reaction, only a $2 billion beat was not enough for investors with high expectations."

Nvidia's CEO, Jensen Huang, said that the company anticipates several billion dollars in revenue from its new Blackwell chips in the fourth quarter, addressing concerns about production delays. "Blackwell samples are shipping to our partners and customers," Huang stated.