Photo Credit: Masaru Kamikura/Flickr.com

NVIDIA (Nasdaq: NVDA) reported its second quarter results that continued to beat all estimates. The company expects sales to continue to grow more than 50% even in the coming quarters, clearly signaling that the demand for AI remains strong. At a $4 trillion market cap, NVIDIA is now the most valuable company in the world.

NVIDIA’s Financials

NVIDIA’s revenues grew 56% over the year to $46.7 billion, ahead of market estimates of $46.1 billion. Non GAAP EPS of $1.05 was also ahead of market estimates of $1.01. This was the ninth straight quarter that the company saw more than 50% growth over the year.

By segment, data center division, which includes AI chips and related parts, grew 56% to $41.1 billion compared with market estimates of $41.34 billion. Its gaming division grew 49% to $4.3 billion, and the automotive and robotics division grew 69% to $586 million.

For the third quarter, the company forecast revenues of $54 billion, ahead of analyst estimates of $53.1 billion.

NVIDIA’s Growth Focus

China remains a market of concern for NVIDIA. During the quarter, its CEO met with Donald Trump to help alleviate some concerns. Last April, the US government had blocked the ability to ship H20 chips to China. The H20 is a processor custom built for sales to China. NVIDIA sees China as a booming market for its chips with an estimated $50 billion addressable market. In July, the government eased some regulations allowing NVIDIA to ship those chips to China in return of a 15% cut of revenue from China chip sales to the government. Nvidia could not sell any H20 chips to China in the quarter, but it expects to ship between $2-$5 billion in H20 revenue during the third quarter.

NVIDIA is also working to get approval for a modified version of the Blackwell chip for China. Blackwell chips are NVIDIA’s most powerful chips right now. The modified chip would have a reduced performance than the regular Blackwell chip but would remain one of the powerful options available in China.

Meanwhile, NVIDIA continues to expand the Blackwell line. Recently, it announced the release of Blackwell Ultra GPU that has been built to accelerate training and AI reasoning. The GPU fuses silicon innovations with improved system-level integration to deliver higher performance, scalability, and efficiency. It also announced the availability of NVIDIA Jetson AGX Thor, developer kit, and production modules. The platform is powered by NVIDIA Blackwell GPU and delivers up to 2,070 FP4 teraflops of AI compute to run AI models. It is expected to improve the ability to run multi-AI workflows to enable robots to have real-time, intelligent interactions with people and the physical world. NVIDIA expects the platform will help developers across multiple industries build physical AI applications spanning humanoid robotics, agriculture, and surgical assistance.

Despite the strong moves, the market is cautious about NVIDIA. While AI investment may be booming across the world, analysts are worried that hyperscale investments may slow down if near-term returns from AI applications remain difficult to quantify. Some are worried that the stock is already priced out and may find it difficult to sustain valuation. NVIDIA is currently trading at $181.60 with a market capitalization of $4.34 trillion. It hit a 52-week high of $184.48 earlier this month and has soared from the 52-week low of $86.62 in April.

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