Nvidia brings out the crowd but not the fireworks

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Nvidia earnings are officially a crossover spectacle. Market strategists say that the quarterly event for the semiconductor darling now rivals the US unemployment report day as a bellwether for broader economic health and animal spirits. On cue, an Nvidia earnings watch party for Thursday afternoon at a Manhattan sports bar was organised and advertised on social media.

The group should not have been disappointed by the actual results. Overall, Nvidia second-quarter revenue of $30bn was up 122 per cent, year over year. And within its core data centre division, revenue was up 154 per cent. The latter growth rate had moderated from 426 per cent in the previous quarter.

Nvidia founder and chief executive Jensen Huang was as much a cheerleader as ever, saying the AI revolution remained in its early innings and that shipments of Nvidia’s next generation chip, Blackwell, would increase in the coming months after supply chain problems.

But perhaps surprisingly, Nvidia shares were down, albeit by an unremarkable 7 per cent in after-hours trading. It was all, for lack of a better description, boring even if Nvidia’s equity value of $2.9tn is almost three times that of Berkshire Hathaway, which joined the trillion dollar club on Wednesday.

If investors were looking for actual fireworks in the AI trade, there were some elsewhere this week. Super Micro, an equipment maker for AI data centres delayed its 10k filing. The short seller Hindenburg Research published a report taking aim at its accounting practices. Super Micro shares are down 62 per cent from their March peak, a market capitalisation loss of $40bn for the once unknown company.

With revenue for the fiscal year expected to be about $120bn Nvidia’s enterprise value/revenue multiple is still around 24 times (for a hardware business that generates 75 per cent gross margins). The company’s net cash balance has hit $25bn. Its new stock buyback authorisation of a meaty $50bn still only reflects less than 2 per cent of the market cap.

In private markets, investment is flooding to find the next Nvidia whose chips have even more advanced processing capabilities. But for the incumbent, even one still adding more than $10bn of revenue a quarter, the wow factor might be fading even if the underlying business is not.

sujeet.indap@ft.com