Nvidia’s shares rally on +100% revenues growth

Today’s headlines

What’s happening: Shares of Nvidia Corporation rose in after-hours trading on Wednesday following the company’s second-quarter results.

What happened: The chipmaker reported better-than-expected sales and earnings results for the latest quarter.

Nvidia issued a strong revenue forecast for the third quarter and announced an expansion of its partnership with Amazon’s computing division.

How were the results: The Santa Clara, California-based company’s sales more than doubled in the second quarter.

• Revenue jumped 106% year-over-year to $96.22 billion, topping consensus estimates of $92.18 billion.
• Adjusted earnings came in at $2.22 per share, beating Wall Street expectations of $2.10 per share.

Why it matters: Data Center revenue jumped 117% year-over-year to $89.0 billion in the second quarter of fiscal 2027, beating market expectations of $85.08 billion. Edge Computing revenue climbed 27% to $7.2 billion.

Nvidia’s gross margin expanded to 75.0%, from 74.9% in the previous quarter and 72.4% in the year-ago period.

CFO ⁠Colette Kress said that surging memory prices and higher component costs could weigh on the company’s overall margins. She added, however, that margins are expected to bottom at around 71%-72% in the fourth quarter.

Nvidia projected 70% revenue growth in the fiscal year ending January 2028, reassuring investors about strong demand for AI computing. Meanwhile, the company also warned about shortages of memory parts, which could curb the overall growth rate.

“AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue,” Nvidia CEO Jensen Huang said.

Nvidia guided to third-quarter revenue of $105.84-$110.16 billion, representing 85.7%-93.2% year-over-year growth, which is a slowdown from the triple-digit growth generated in the second quarter.

The company’s China business continues to face uncertainties, despite the US in May clearing around 10 Chinese companies to buy Nvidia’s AI chips, the H200. With deliveries remaining stalled for months, Nvidia excluded Chinese data center revenue in its forecast.

How shares responded: Nvidia’s stock jumped 4.7% to $219.53 in the extended trading hours on Wednesday following the release of quarterly results. The stock has gained around 11% year to date.

What to watch: Investors will continue monitoring memory prices and AI demand, which are expected to impact the company’s overall results ahead.

The markets today

Bitcoin in focus today following the release of US PCE inflation data

Context: Bitcoin prices slipped below $79,000 this morning following July’s hotter-than-expected PCE index.

Details: The largest digital asset had surged as high as $81,235 earlier on Wednesday but fell sharply following the release of the Personal Consumption Expenditures index by the US, which is the Federal Reserve’s preferred gauge of inflation.

The PCE price index climbed 0.2% in July, compared to a 0.1% decline in June. Headline inflation came in at 3.7% year-over-year, higher than market estimates of 3.6%. The core PCE, which excludes volatile food and energy prices, rose 0.2% on a monthly basis, while the annualised reading came in steady at 3.3%.

The recent inflation data from the US disappointed investors who were hoping for inflation to continue easing following June’s decline. The higher-than-expected PCE data release sparked speculations of the Federal Reserve hiking interest rates.

Higher interest rates exert pressure on non-yielding assets, like cryptocurrencies.

Weakness in the US dollar lent some support to the BTC/USD pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 99.15 this morning.

Bitcoin prices fell around 0.5% to trade at $78,729.86 this morning, after climbing more than 20% in the past month.

What to watch: Investors await Fed chief Kevin Warsh’s speech at the annual Jackson Hole economic symposium on Friday.

Other Markets: European indices closed mixed on Wednesday, with the FTSE 100 and STOXX Europe 600 Index down by 0.07% and 0.01%, respectively, and the DAX 40 and CAC 40 up by 0.08% and 0.27%, respectively.

The news shaping the markets

CIA director John Ratcliffe held meetings with Russia’s intelligence officials during his Moscow visit. The news sent the USD/RUB pair higher in forex trading this morning.

Australia’s household spending climbed 1.1% in July, after a 1.0% gain in June. The latest reading topping market estimates of a 0.4% rise lent support to the AUD/USD forex pair.

China’s industrial profits surged 17.6% year-over-year to 4.58 trillion yuan during the first seven months of the year, following an 18.7% gain in the January-June period, which sent the USD/CNY pair lower in forex trading this morning.

The Bank of Korea increased its base rate by 25 basis points to 3% at its latest meeting, which exerted pressure on the USD/KRW forex pair.

UK’s car production dipped 10.6% year-over-year to 61,767 units in July, compared to a 1.3% decline in the previous month, sending the GBP/USD pair lower in forex trading this morning.

What else to watch today

• Eurozone’s Loans to Companies (1200 UAE Time)
• Eurozone’s Loans to Households (1200 UAE Time)
• Eurozone’s M3 Money Supply (1200 UAE Time)
• France’s Unemployment Benefit Claims (1400 UAE Time)
• France’s Jobseekers Total (1400 UAE Time)
• European Central Bank’s Monetary Policy Meeting Accounts (1530 UAE Time)
• Canada’s Current Account (1630 UAE Time)
• Canada’s Average Weekly Earnings (1630 UAE Time)
• US Goods Trade Balance (1630 UAE Time)
• US Initial Jobless Claims (1630 UAE Time)
• US Wholesale Inventories (1630 UAE Time)
• US Continuing Jobless Claims (1630 UAE Time)
• US Kansas Fed Composite Index (1900 UAE Time)
• US Kansas Fed Manufacturing Index (1900 UAE Time)