Slowing growth, hitting a ceiling? Jensen Huang's confidence is difficult to calm "public concerns"

Overnight, NVIDIA turned in a good "report card", but its stock price plummeted, falling 8% after hours.

The higher the expectations, the greater the disappointment? Data shows that NVIDIA's revenue in the second quarter hit a record high, exceeding expectations by 122%, and the revenue guidance for the third quarter, with a maximum growth of 83%, also exceeded market expectations. However, this revenue guidance did not reach the most optimistic triple-digit expectations, and for the first time in six quarters, it fell below 100%.

During the earnings call, CEO Jensen Huang remained optimistic about the future of AI, but his optimism did not help reverse the downward trend in stock prices. "Cracks" began to appear, with the market worrying about NVIDIA's slowing growth, delays in Blackwell chip production, and whether the AI ​​boom can continue.

Blackwell ships in the fourth quarter, Jensen Huang remains optimistic, but the stock still falls

During the NVIDIA earnings call, CEO Jensen Huang maintained an optimistic outlook on the future of AI, believing that the momentum of generative AI development is accelerating, and the company is just beginning to reshape the global data center, which is a trillion-dollar opportunity.

Regarding the highly anticipated progress and demand for Blackwell, NVIDIA stated that the market's demand for the Hopper chip remains "strong" and there are high expectations for Blackwell. Earlier reports suggested that a large number of Blackwell shipments may be delayed until the first quarter of next year.

Jensen Huang said, "We have started mass production (of Blackwell) and will ship in the fourth quarter, generating billions of dollars in Blackwell revenue." However, Huang did not provide an answer to whether the billions of dollars in revenue are incremental.

At the time of the earnings call, NVIDIA's stock price continued to decline, falling 8% after hours and nearly 7% by the close. Analysts believe that if this trend continues, it could be the worst stock performance after NVIDIA's earnings report in two and a half years.

During the call, some analysts also asked a question that many people are concerned about: Can the significant investment in the AI field over the past year and a half bring sufficient returns?

Regarding the debate on capital expenditures and return on investment, NVIDIA was vague and stated that users investing in NVIDIA's infrastructure can immediately see returns, and this is currently the highest return on investment in infrastructure and computing infrastructure, which can help customers save money.

Whether NVIDIA will provide clearer guidance on return on investment (ROI) will influence market confidence in tech giants betting on AI in the long term.

Revenue growth slows down, hitting a ceiling?

Over the past two years, NVIDIA's strong sales of graphics processors for AI data centers have brought significant revenue and profit growth to the company, but such rapid growth is slowing down.

On August 28, The Wall Street Journal commented that although NVIDIA's overall performance is still strong and has repeatedly exceeded its own and Wall Street's expectations, the growth rate of NVIDIA has started to slow down in recent quarters. Compared to the brilliance of last year, the growth rate is not significant, and it is becoming increasingly difficult to far exceed expectations every quarter Compared to the first quarter, NVIDIA's Q2 gross margin and data center sales growth rate showed a sequential decline. The company's Q2 adjusted gross margin was 75.7%, a decrease of 3.2 percentage points sequentially.

Analyst Lucas Keh from Third Bridge stated in a report that NVIDIA has been cutting prices on the H100 series, which he believes is one of the potential reasons for the sequential decline in gross margin.

Furthermore, data shows that NVIDIA's revenue growth rate year-over-year and sequentially has also decreased this quarter.

Daniel Newman, CEO of Futurum Group, commented on NVIDIA's financial report, calling it a "solid quarter, but any guidance below the upper end of expectations could raise some concerns and uncertainties."

"I think we are seeing the peak of expectations, and the market is very bullish on NVIDIA's stock. Unless there is guidance that exceeds expectations or unexpected announcements, there is not much upside," he said. "The demand for Hopper should be able to safely exceed the company's guidance, although it is higher than market consensus, I still consider it conservative."