NVIDIA Post-Earnings Report

Earnings per share exceeded expectations with 111% growth, while revenue increased by 106%. However, the market initially reacted with a sell-off.

NVIDIA's second-quarter financial results once again highlighted the AI revolution. Earnings per share grew by 111% compared to the same quarter of the previous season, while revenue increased by 106%. Pre-earnings market prices were exceeded by 6% for earnings per share and 4% for revenue. However, NVIDIA's accustomed market to this type of growth led to an unprecedented sell-off.

Post-Market Volatility: Rise from $203 to $222

The sentiment, which had been hovering around $209, retreated to $203 in pre-data collection trading. However, during speeches by Chief Financial Officer Collette Kress and later CEO Jensen Huang, the stock surged 10%, reaching $222, and largely maintained that level.

Critical Factors Behind the Rise

Diversification in Demand: A New Market Beyond Hyperscalers

The most critical shift in NVIDIA's growth outlook is that demand is no longer solely coming from large cloud providers (hyperscalers). Dominant AI projects, NeoClouds, AI startups, and enterprise customers are all contributing to the market today, with this segment growing at approximately 100% annually. According to Jensen Huang, hyperscalers could become larger than existing cloud economies in this market overseas.

Supply Lags Demand

The magnitude of this demand has exceeded NVIDIA's current supply capabilities. The company explains that it expects approximately 70% growth next year, and this isn't because demand will increase by 70%, but because NVIDIA can only grow by a maximum of 70% in terms of supply. In other words, demand is much larger than supply.

New Architecture, New Economical Payment

The new architecture increases NVIDIA's economic payment per data center. The revenue opportunity per gigawatt is increasing from approximately $18 billion in Hopper to $25 billion in Grace Blackwell, and to $40 billion in the next-generation Vera Rubin. However, it is shown that the growth stems not only from selling more GPUs, but also from the fact that a next-generation AI data center generates more revenue for NVIDIA.

Agentic AI: The Next Leg of Demand

Jensen Huang stated that the next leg of demand is agent AI, and that members are already in the group in terms of agent AI token consumption. Highlighting the detailed development of this token consumption, Huang signaled that the main driving force of growth in this area will increase in the coming period.

Competition and Market Dynamics

Jensen Huang gave a clear answer to the question of whether NVIDIA is at risk given the large number of companies that have entered the chip manufacturing business. Those building data centers can assemble different components in their own way. However, most companies lack the competence or will to do so. Therefore, there is a very large market where growth is observed.

The development of custom chips by brands like OpenAI and Anthropic is not seen as a direct threat by NVIDIA. According to Huang, while many of these chips are designed for specific service or inference workloads, NVIDIA offers a platform that encompasses the entire AI lifecycle, from training to agent inference.

Conclusion: A New Balance in the AI Ecosystem

NVIDIA's quarterly results and announcements demonstrate that the company's performance in the AI ecosystem has been further strengthened. Diversification of demand, constrained supply, the economic advantages brought by new architectures, and the rise of mediated AI reveal that NVIDIA's growth story is still in its early stages. Despite the initial sell-off in the market, the historic 10% increase confirms confidence in the long-term potential of the companies.

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