Nvidia's revenue and profits more than double in latest earnings report

Nvidia announced a strong financial performance for its latest quarter, projecting revenue growth that exceeded Wall Street's expectations. The company revealed that its quarterly revenue had more than doubled, signalling robust demand for its AI chips. In addition to this, Nvidia disclosed plans to expand its partnership with Amazon Web Services, deploying an additional 2 million GPUs across Amazon’s global infrastructure in 2027 and 2028.

This announcement came during an earnings call, where the company’s finance chief, Colette Kress, shared these developments. The news led to a surge in Nvidia’s shares, with after-hours trading seeing a jump of more than 4 per cent. The company’s growth trajectory has been recognized as a key indicator of the AI market, as its chips are instrumental in powering major data centers and advanced AI models worldwide.

Currently, Nvidia's shares have gained 12.4 per cent this year, outpacing competitors AMD and Intel, which have both more than doubled. The company’s outlook is particularly significant given the recent surge in Big Tech spending on AI infrastructure, with spending projected to reach over $730 billion this year, a substantial increase from last year’s $400 billion.

However, there is growing interest in in-house chip efforts from tech companies as they seek to reduce reliance on Nvidia’s costly and supply-limited processors. Additionally, Nvidia faces scrutiny over its involvement in financing the AI boom through a new tie-up with six major financial institutions, potentially raising more than $500 billion for AI infrastructure.

Analysts are closely monitoring Nvidia’s margins, anticipating potential pressure from the production ramp-up for its Rubin chips and rising memory prices. Regarding the company’s margins, Nvidia expects an adjusted gross margin of 74 per cent, with a margin range of plus or minus 50 basis points, for the third quarter, closely aligning with analysts' expectations of 74.77 per cent.

The company forecasted third-quarter revenue of $108 billion, plus or minus 2 per cent, surpassing analysts’ average estimate of $104.19 billion. In the current climate, where AI is increasingly used for automation and query answering, Nvidia’s graphics processors face growing competition from central processors and custom chips tailored for inference tasks.

This shift has prompted major technology firms to invest in their own silicon. Meta recently announced plans to start manufacturing its in-house AI chip, "Iris," in September, as part of a four-generation custom silicon project aimed at reducing computing costs. Similarly, Alphabet has ordered over 3 million chips from Intel for 2028, and Nvidia is reportedly evaluating Intel's manufacturing technology to develop a processor that combines four GPUs into a single unit.

As rivals Intel and AMD also target the inference market, Nvidia has recently unveiled a new central processor and AI system based on technology licensed from the inference-focused startup Groq. This deal, valued at $17 billion, integrates Groq’s chips with Nvidia’s upcoming Vera Rubin platform. The company has estimated its AI chip revenue opportunity to exceed $1 trillion by 2027, more than doubling from the $500 billion opportunity projected for 2026.

Nvidia’s second-quarter revenue more than doubled to $96.22 billion, surpassing estimates of $92.17 billion, while adjusted profit was $2.22 per share for the three months ended July 26, beating estimates of $2.10 per share. Data center revenue more than doubled to $89 billion, exceeding estimates of $85.08 billion. The company’s total market value of $5.16 trillion has surpassed Wall Street’s sales expectations over the past 15 quarters, although the frequency and magnitude of these beats have been diminishing.