Nvidia's Stock Dips 6.38% Despite Beating Q2 Expectations and $50B Buyback Announcement

Nvidia (NVDA) experienced a 6.38% drop, marking a two-day decline of 8.35%.

On August 28th, Nvidia released its much-anticipated Q2 earnings report. Despite beating profit expectations from May to July and announcing a $50 billion stock buyback plan, Nvidia's Q3 revenue guidance of around $32.5 billion and gross margin outlook failed to meet the highest expectations, causing its stock to drop by up to 8.5% in after-hours trading.

Compared to previous quarters, revenue growth has decelerated. Nvidia also confirmed facing difficulties with its advanced Blackwell AI chip series, though it still plans a Q4 launch.

Analysts remain optimistic despite these headwinds. Truist Securities highlighted Nvidia's leadership in the AI sector, particularly noting the strong, steady growth in its primary data center division. Truist raised its price target for Nvidia from $145 to $148.

Jefferies remarked that concerns about the significant delay of the much-awaited Blackwell series are now in the past. The Hopper series chips are expected to continue driving solid revenue. Jefferies maintains a buy rating for Nvidia with a $150 price target.

Wolfe Research expressed continued optimism about the Blackwell series despite Nvidia's guidance indicating a slowdown. They believe the new chip lineup will fortify Nvidia's revenue growth potential. Wolfe maintained an outperform rating with a $150 price target.

Nvidia's Q2 revenue reached $30 billion, growing 15% quarter-over-quarter and 122% year-over-year, outpacing the previous expectation of $28 billion. Data center revenue hit $26.3 billion, driven primarily by high demand for Nvidia Hopper GPUs and networking platforms.

Despite reported challenges, Nvidia's advanced AI platforms continue to be in high demand, spanning regions and contributing significantly to revenue. Products like the Hopper and Blackwell series are anticipated to bring immense revenue in the coming quarters.

Investors closely watch Nvidia's performance, recognizing its crucial influence within the AI and tech market segments. The company's long-term structural growth remains unchallenged, offering optimistic investment opportunities as Nvidia continues to evolve amidst fluctuating market dynamics.