Nvidia stock slips 1% despite beating earnings expectations and raising guidance

Nvidia NVDA stock was down over 1% in after-hours trading after the firm posted its earnings report.

Nvidia reported record second-quarter fiscal 2027 revenue of $96.2 billion, up 18% from the previous quarter and 106% from a year earlier, as demand for AI infrastructure continued to accelerate.

Net income in the quarter more than doubled to $53.95 billion.

The chipmaker reported GAAP earnings of $2.46 per diluted share, while non-GAAP earnings came in at $2.22.

Both revenue and earnings were above analyst estimates.

Both GAAP and non-GAAP gross margins were 75%.

“We believe AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue,” CEO Jensen Huang said.

Why is the Nvidia stock going down?

The muted reaction underscores growing investor skepticism around the artificial intelligence boom.

After years of rapid growth, some investors are increasingly concerned that valuations across the sector may have entered bubble territory.

Nvidia’s numerous investment agreements with companies across the AI ecosystem have also raised concerns that circular transactions could leave the industry more vulnerable if spending momentum slows.

As the world’s most valuable company and the leading supplier of AI accelerators used to train and run artificial intelligence models, Nvidia has become a key barometer for the health of the broader AI industry.

Its quarterly results are therefore closely watched for signs of whether the massive spending cycle on AI infrastructure can continue.

Data Center revenue jumps 117%

Nvidia's Data Center business remained the primary growth engine, generating $89 billion in second-quarter revenue, up 18% sequentially and 117% from a year earlier.

The company said its Vera Rubin platform is now ramping into full production, with systems running at customers including CoreWeave, Google Cloud, Microsoft Azure, Oracle Cloud Infrastructure and Nebius.

Nvidia also highlighted the rollout of its Spectrum-6 networking platform and Vera CPU, which the company described as its first CPU designed specifically for AI agents.

The company said its Groq 3 LPX inference accelerator is also now in full production.

The results underscore the continued scale of AI infrastructure spending, with Nvidia increasingly positioning itself as a provider of complete AI factory infrastructure rather than GPUs alone.

Nvidia guides for $108 billion in revenue

For the third quarter of fiscal 2027, Nvidia expects revenue of $108 billion, plus or minus 2%.

Importantly, the company said its guidance does not assume any Data Center compute revenue from China.

GAAP and non-GAAP gross margins are expected to be 74%, plus or minus 50 basis points.

GAAP operating expenses are expected to be approximately $9.2 billion, while non-GAAP operating expenses are projected at $9 billion.

The guidance points to continued sequential growth even as Nvidia expects gross margins to moderate slightly from the 75% reported in the second quarter.

The company’s conference call with investors begins at 5 p.m. ET.