NVIDIA CORP

Financial Outlook

• Revenue Growth

  • Total revenue for Q2 was $30 billion, which reflects a 15% sequential increase and a 122% year-on-year growth.
  • Data center revenue reached a record of $26.3 billion, marking a 16% sequential and 154% year-on-year increase.
  • The company anticipates Q3 revenue to be around $32.5 billion, plus or minus 2%.

• Architecture Transition

  • The company is transitioning from general-purpose computing to accelerated computing. This shift is attributable to declining CPU performance and the increasing demand for computing power, particularly in AI and data-intensive applications.
  • The introduction of the Blackwell architecture is expected to be a significant game-changer, with production ramp scheduled for Q4 and anticipated revenue in the several billion dollars for that quarter.

• Gross Margins

  • GAAP gross margins are forecasted at 74.4% for Q3, with non-GAAP margins at 75%.
  • Full-year gross margins are expected to remain in the mid-70% range.

• Investment in Innovation

  • NVIDIA plans to increase operating expenses by about 40% to support the development of next-generation products.
  • A $50 billion share repurchase authorization reflects confidence in future performance and shareholder returns.

• Positive Market Dynamics

  • The demand for NVIDIA products is driven by generative AI, model training, and inference workloads.
  • Significant growth is expected in both consumer Internet companies and cloud service providers (CSPs), with CSPs representing approximately 45% of data center revenue.

Key Drivers of Future Growth

• Powerful growth is anticipated across several segments due to:
  • Increased adoption of Hopper architecture and ramp-up of Blackwell.
  • Growing needs for accelerated computing and liquid-cooled data centers.
  • Expanding applications from AI-powered chatbots, generative AI, to large-scale recommender systems.
  • Strategic partnerships and growing interest in sustainable computing solutions.

Conclusion

The outlook for NVIDIA remains robust due to its strategic shift towards accelerated computing, continuous innovation in AI technologies, and strong demand across various sectors. The company is poised for significant growth driven by its architectural advancements and market demand for next-generation computing capabilities.