Why Nvidia Stock Is Falling Today

Nvidia (NASDAQ: NVDA) The stock fell Thursday after the company released its second-quarter earnings results. The artificial intelligence leader’s stock was down 3.2% as of 10:15 a.m. ET, according to data from S&P Global Market Intelligence.

Nvidia Corp. reported second-quarter results after the market closed yesterday, and they came in significantly better than most Wall Street targets. The company also issued third-quarter guidance that beat analysts’ average estimates. But expectations were sky-high ahead of the report, and comments from an investor conference call suggested investors might have to wait longer for the specialty semiconductor company’s next-generation Blackwell processors.

Nvidia shares fall despite impressive Q2 results

Nvidia registered Non-GAAP General Electric Co. reported adjusted earnings of $0.68 per share on revenue of $30 billion in the second quarter of its current fiscal year, which ended July 28. At the time, the average analyst estimate was calling for the company to post adjusted earnings of $0.64 on revenue of $28.7 billion. The company’s sales rose 122% year over year in the period, and adjusted earnings per share rose 152% compared to the same period a year earlier.

The company had a great fourth quarter last year, with AI-related demand driving another round of strong growth from data center customers. Revenue from the segment rose 154% year over year, and higher selling prices for graphics processing units (GPUs) and accelerators in the segment helped the company achieve an adjusted gross margin of 75.7%. That was slightly lower than the 78.9% margin it posted in the fiscal first quarter, but it still beat the company’s target margin of 75.5% and suggests that Nvidia’s pricing power on its most advanced hardware remains very strong.

Strong Q3 Guidance Doesn’t Overshadow Concerns Over Blackwell Delays

For the third quarter, Nvidia forecast revenue of $32.5 billion — a target that came in ahead of Wall Street’s average estimate of $31.7 billion in sales for the period. The company also forecast an adjusted gross margin of 75%. While that suggests gross margin will decline on a sequential quarterly basis, the decline here seems quite small and should actually alleviate pricing power concerns.

But despite the strong second-quarter results and third-quarter guidance, investors are focusing on some uncertainty surrounding the launch of Nvidia’s Blackwell processors. The company said production of its next-generation chip platform will ramp up in the fourth quarter of this year, suggesting the new processors could miss the initially announced 2024 release window and be delayed to 2025.

The possibility of a Blackwell launch delay due to a design flaw was widely reported before Nvidia’s earnings report, so the possibility of a launch delay to next year isn’t shocking. But expectations were so high before the report that investors seemed to be focusing on the implications of a relatively short delay over signs that the company was running at full capacity.

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Why is Nvidia stock down today? Originally posted by The Motley Fool

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