Nvidia unloads another quarter of feverish growth — but it wasn’t quite as good as usual

Not very demure… Nvidia said that both its sales and its profit more than doubled last quarter from a year earlier. As the AI-computing frenzy raged, Q2 revenue came in at an expectation-topping $30B while profit was an eye-popping $16.6B. The chip titan’s sales forecast for the current quarter was also better than analysts had expected. Still, the stock dropped 7% yesterday after Nvidia reported.

• Tough comparisons: Nvidia’s 122% sales growth was undeniably strong, but it was preceded by three straight quarters of 200%+ growth. In Q1, its revenue had more than 3x’d from a year earlier and profit had 6x’d. Womp.

More chips in the bag… Nvidia, once known mostly for its sophisticated graphics cards for gaming consoles, is now estimated to control between 70 and 95% of the AI-chip market. Yet rivals are comin’ in hot: in November, Intel and AMD announced their own genAI chips. And Meta, OpenAI, and Microsoft all said they’d use AMD’s chip. Like Nvidia, AMD makes gaming GPUs that it’s adapting for AI. Microsoft said it’s using AMD’s processors to run its Copilot models. Meantime, China’s Huawei has reportedly developed its own advanced AI chip, which could eat into Nvidia’s sales in the country. Even worse: Nvidia is competing against its own customers.

• Google, Amazon, and Microsoft (aka Nvidia’s biggest buyers) are also cookin’ up their own AI chips. Google said it trained its Gemini AI model on its own processors.

• Big Techies account for nearly 40% of Nvidia’s sales. If Amazon, Alphabet, Microsoft, and Meta start relying on their own chips, that’s bad news for Nvidia.