What’s happening: Shares of Nvidia Corporation fell in after-hours trading on Wednesday, following the release of the company’s second-quarter results.
What happened: The AI stalwart reported stronger-than-expected sales and earnings for the latest quarter on Wednesday.
Nvidia also issued an upbeat revenue forecast for the third quarter and announced a repurchase authorisation.
How were the results: The Santa Clara, California-based company reported strong growth in sales for the three months ended in July 31.
Why it matters: Revenues from the company’s datacentre business more than doubled from the year-ago quarter. Datacentre revenues jumped 154% year-over-year to $26.3 billion, notching another quarter of record revenues.
CEO Jensen Huang said global datacentres “are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.”
The company’s gross margins expanded by 4.5 basis points (bps) year-over-year to 75.7% in the second quarter but marked a contraction of 3.2 bps from the prior quarter.
Nvidia’s board announced additional share repurchases worth $50 billion without expiration. The company also said it would pay its next quarterly cash dividend of 1 cent per share on October 3.
Huang also said that the anticipation for its new Blackwell processor lineup “is incredible.” However, Nvidia continues to face production snags for this next generation of its leading AI processor.
The stock come under pressure on fears of further delays in manufacturing the new Blackwell chips. Although Nvidia performed better than expected in the second quarter, it disappointed investors who were expecting another blowout quarter.
Management guided to revenues of $32.5 billion plus or minus 2% for the third quarter, higher than market estimates of $31.69 billion. They projected non-GAAP gross margins of 75% plus or minus 50 basis points.
How shares responded: Nvidia’s shares tanked 6.9% to $116.95 in extended trading on Wednesday, after the company released its quarterly results. The stock has jumped around 161% year to date.
What to watch: Investors will continue monitoring the production of the new Blackwell lineup, as Nvidia is making changes to boost its manufacturing yield (number of functioning chips in every batch of production).
Markets will also focus on other semiconductor and AI-related stocks, which could come under pressure following the decline in Nvidia’s shares.
Context: The CAD/USD forex pair moved higher this morning amid weakness in the US dollar.
Details: Investors continued monitoring the Bank of Canada’s monetary policy outlook ahead of the release of the country’s second-quarter GDP data, which is scheduled for Friday. The Canadian economy is expected to grow at an annualised rate of 1.6%, below the central bank’s 2.4% target. This could trigger speculations of another rate cut when the BoC announces its policy decision next week.
A rise in the price of crude oil, one of Canada’s major exports, lent support to the loonie. WTI crude oil prices gained around 0.3% to $74.75 per barrel.
Weakness in the US dollar also provided a boost to the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 100.98.
The CAD/USD forex pair rose around 0.1% to 1.3472 this morning. The S&P/TSX Composite Index fell 0.57% to close at 23,126.98 on Wednesday.
What to watch: Investors await the release of economic data on current account and average weekly earnings from Canada today. Canada’s current account deficit, which grew to C$5.4 billion in the first quarter, is expected to widen further to C$5.9 billion in the second quarter.
Average weekly earnings of non-farm payroll employees, which climbed 4.2% year-over-year in May, is projected to rise by 3.4% in June.
Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.39%, 0.60% and 1.18%, respectively.
Russia’s military forces gained control of the settlement of Komyshivka in Ukraine’s Donetsk region. The news sent the safe-haven US dollar index slightly lower in forex trading this morning.
New Zealand’s ANZ Business Outlook Index rose to 50.6 in August, from 27.1 in the prior month. The region’s business morale surging to its strongest level since May 2014 lent support to the NZD/USD forex pair.
Macau’s trade deficit narrowed to MOP$ 9.40 billion in July, from MOP$ 10.05 billion in the year-ago period, sending the MOP/USD pair higher in forex trading this morning.
Russia’s retail sales grew 6.1% year-over-year in July, easing from the 6.3% growth recorded in the earlier month, which exerted pressure on the RUB/USD forex pair.
The Energy Information Administration said that US crude oil inventories fell by 0.846 million barrels in the week ending August 23, which sent the WTI crude oil prices higher this morning.
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