Giant chipmaker NVIDIA has rallied +4.4% in after-hours trade this morning after delivering a beat on both revenue and EPS, and forward guidance was inline to a slight beat relative to expectations. Guidance has been a dominant factor in the ASX reporting season, as it was this morning, with NVIDIA’s guidance solid, though not spectacular.
Result highlights:
- Revenue & EPS: Total revenue of US$96.2bn was 4.2% above expectations, while adjusted EPS of US$2.22 beat consensus by 5.7%, with revenue growing 106% YoY.
- Data Centres: 2Q Data Centre revenue reached US$89.0bn, 3.6% ahead of consensus and more than doubling YoY, underlining continued extraordinary demand for AI infrastructure.
- Margins: 3Q adjusted gross margins are expected at 73.5–74.5%, down from 75% in Q2, suggesting the enormous growth is coming with higher costs as Nvidia ramps its next-generation chips.
MM’s Take: Another excellent result, but Nvidia’s guidance beats have narrowed from more than 20% a few quarters ago to mid-single digits today, illustrating how quickly market expectations are catching up with its extraordinary growth. For almost any other company, 106% YoY revenue growth and ~74% gross margins would be exceptional; for Nvidia, they are increasingly viewed as simply meeting an exceptionally high bar.
- The key point for MM is that Nvidia is still delivering, and now on ~16x FY28 earnings, the huge premium valuation is starting to work itself out.
MM is bullish toward NVDA around ~$US210
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