U.S. semiconductor corporations Nvidia released a surprise result that beat market expectations despite concerns about an artificial intelligence (AI) bubble. Having seized the AI Semiconductor supply chain, Nvidia not only generated massive revenue in the second quarter this year but also offered a rosy outlook that it will post a sales growth rate of 70% through 2028.
On the 26th (local time), Nvidia said it posted $96.2 billion in sales in the second quarter ended in July. That is nearly $4 billion (5.55 trillion won) above the market estimate of $92.3 billion. Net income was $59.7 billion, and earnings per share were $2.46, both topping analysts' projections. In particular, sales in the data center institutional sector, which drives overall results, surged 117% from a year earlier to $89.0 billion. The data center institutional sector is the core business that supplies server semiconductors essential for AI training and operation.
Huang Jen-hsun, Nvidia chief executive officer (CEO), said in a statement that "AI has reached an inflection point and is performing useful tasks," adding, "Around this time last year, a single lab led the build-out of infrastructure, but today we are in a golden age as new AI labs and startups are flourishing." Last year, the place that effectively led the infrastructure build-out by buying Nvidia's expensive, cutting-edge AI Semiconductors in bulk was only OpenAI. But starting this year, as numerous competing AI corporations and new startups such as Anthropic rushed into AI development, the pool of customers looking to buy Nvidia chips expanded explosively. Huang's remarks are also interpreted to mean that semiconductor demand, which had been concentrated among a few big tech companies, is spreading across the industry.
Colette Kress, Nvidia chief financial officer, told Reuters, "We expect Nvidia sales in 2028 to increase by 70%." However, she added, "Demand is expected to double, but supply constraints mean there are limits to immediately translating that into sales growth." Nvidia said it would expand cooperation with Amazon Web Services, Amazon's cloud subsidiary, to deploy an additional 2 million Nvidia graphics processing units across global infrastructure in 2027 and 2028.
Nvidia shares rose more than 4% at their peak in after-hours trading after it released results following the market close. However, experts said the stock's gains were limited as an outlook emerged that the gross margin, a profitability metric, could dip slightly to around 74% in the third quarter from the previous 75%. In addition, major clients such as Google and Meta are accelerating in-house chip development, and export controls make sales in the China market uncertain, which are cited as risk factors.