Written by Max A. Cherny, Arshia Bajwa, and Stephen Nellis
SAN FRANCISCO (Reuters) – Nvidia on Wednesday forecast its slowest revenue growth in seven quarters, with the artificial intelligence chip maker failing to meet the high expectations of some investors who made it the world’s most valuable company.
Shares of the Santa Clara, California-based company fell 5% after it announced results but quickly pared losses to trade down 2.5% after hours. During the regular session they closed down 0.8%.
Expectations were high ahead of the results, with Nvidia shares rising more than 20% over the past two months and hitting an intraday record on Monday. The stock price has nearly quadrupled so far this year, and has risen more than ninefold over the past two years, giving it a market value of $3.6 trillion.
Nvidia is in the middle of launching its powerful Blackwell family of AI chips, which will impact the company’s gross margins initially but improve over time.
Nvidia customers have embraced the new line of processors and the company will exceed its initial forecast of several billion dollars in processor sales in the fourth quarter, Chief Financial Officer Colette Kress told analysts on a conference call Wednesday.
Asked about media reports that a pioneering liquid-cooled server containing 72 of the new chips had overheating issues during initial testing, CEO Jensen Huang said there were no issues and that customers such as Microsoft, Oracle and CoreWeave were implementing the systems.
“There are no issues with our Grace Blackwell liquid cooling systems,” Hwang told Reuters. “Engineering is not easy at all, because what we do is difficult, but we are doing well.”
Chris said its Blackwell family of chips will initially achieve gross margins in the low 70% range, but will rise to the mid-70% range when production ramps up.
The company expects revenue of $37.5 billion, plus or minus 2%, for the fourth quarter, compared with analysts’ average estimate of $37.09 billion according to data compiled by LSEG.
While it’s still an impressive growth rate thanks to huge demand for the company’s chips that make up the brains of complex generative AI systems, it represents a clear slowdown from previous quarters when Nvidia mostly posted sales that at least doubled.
Nvidia’s Q4 forecast indicated that the company’s revenue growth will slow to about 69.5% from 94% in the third quarter.
“Investors have become accustomed to this company’s significant outperformance, but it’s becoming harder and harder to do so,” said Ryan Detrick, chief market strategist at Carson Group. “This is still a very strong report, but the reality is that when the bar is that high, it makes things that much more difficult.”
Comments are closed, but trackbacks and pingbacks are open.