NVIDIA Shares Slide Despite Q2 Revenue and EPS Beats

By: Eliza Bennet

Market Reaction to NVIDIA's Q2 Performance

NVIDIA once again surpassed Wall Street expectations with its Q2 earnings report, posted on August 28. The announced earnings per share (EPS) and revenue exceeded forecasts, with analysts predicting an EPS of $0.64, while NVIDIA delivered $0.68—a 6% surprise. Revenue projections were similarly outperformed, with anticipated earnings set at $28.73 billion, but actual figures climbed over $30 billion, marking a 5% surprise. Despite these impressive results, NVIDIA’s stock experienced a decline of up to 8% in pre-market trading, although it later regained some ground, trading about 2% down.

Concerns emerged largely due to production challenges related to NVIDIA’s next-generation Blackwell chips. In an attempt to reassure stakeholders, CEO Jensen Huang emphasized the company's ability to address these issues and boost supply significantly by the fourth quarter. “We’re going to have lots and lots of supply, and we will be able to ramp,” he assured.

NVIDIA, now valued at over $3 trillion, has outperformed all other stocks in the S&P 500 with an impressive 155% year-to-date return. Only Vistra Corp has achieved similar triple-digit returns this year. Nonetheless, shrinking margins in surprise EPS figures indicate growing market caution.

Investors' Concerns and Future Outlook

Adding to investor unease, NVIDIA approved a substantial $50 billion share buyback, but ongoing stock sales by CEO Jensen Huang have raised additional concerns. Huang reportedly sold $580 million worth of stock in recent months, according to sources. The exceptional performance by NVIDIA is noteworthy, although upcoming production and supply chain concerns remain a consideration for market analysts.

Source: Google Financials