Nvidia’s earnings beat market expectations. But that wasn’t enough for investors, and after the close, they let the stock fall

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Nvidia reported second-quarter results and a third-quarter outlook that beat market expectations. Still, investors seemed to have higher expectations. Shares fell 4% to $120.40 after the close.

Nvidia’s second quarter earnings Revenue was $30.04 billion, $13.51 billion last year, and an estimated $28.86 billionMeanwhile, sales in all divisions exceeded market expectations. Data Center revenue was $26.3 billion (up $10.32 billion from the previous year, $25.08 billion was expected). Gaming revenue increased 16% year-on-year to $2.9 billion (expected $2.79 billion). Professional Visualization revenue increased 20% year-on-year to $454 million, exceeding the market expectation of $451.1 million. Automotive sales increased 37% year-on-year to $346 million, compared with the market estimate of $347.9 million.

However, they have to subsidize the increase in sales High R&D costsup 51% year-on-year to $3.09 billion, slightly higher than the market expectation of $3.08 billion. Adjusted operating expenses increased 52% year-on-year to $2.79 billion (the market estimate was $2.81 billion).

Adjusted operating profit still increased to $19.94 billion This was higher than last year’s $7.78 billion and exceeded market expectations of $18.85 billion. Adjusted earnings per share: 68c, market forecast: 64c. Adjusted gross profit margin climbed to 75.7% That’s up from 71.2% last year (market estimates were 75.5%). Nvidia’s free cash flow also more than doubled year-over-year to $13.48 billion. While it is still maintaining its quarterly dividend at 1 cent per share, it has approved Additional $50 billion in stock buybacks.

Third quarter sales expected to be $32.5 billionplus or minus 2%, while the average analyst expectation is $31.9 billion. Adjusted operating expenses should be about $3 billion, higher than the market expectation of $2.98 billion. However, adjusted gross margin should be between 74.5% and 75.5%, with an expected 75%.

The next-generation Blackwell architecture will begin production in the fourth quarter, with production expected to reach billions of dollars and will continue until 2026. In the second quarter, Nvidia has already sent test samples of the architecture to customers. Demand for the Hopper architecture is strong, and deliveries are expected to increase further in the second half of fiscal 2025.

NVDA