Nvidia forecasts decelerating growth after boom

Nvidia Corp., the world’s most valuable company, gave a tepid revenue forecast for the current period, signaling that growth is decelerating after a staggering two-year boom in artificial-intelligence spending.

- By Ian KING

NIVIDIA CHIEF Jensen Huang attends the "Winning the AI Race" summit in Washington, D.C., in July.

Sales for the Santa Clara, Calif., company will be roughly $54 billion in the fiscal third quarter, which runs through October, the company said in a statement Wednesday. Though that was in line with the average Wall Street estimate, some analysts had projected more than $60 billion.

The outlook adds to concern that the pace of investment in AI systems is unsustainable. Difficulties in China also have clouded Nvidia’s business. Though the Trump administration recently eased curbs on exports of some AI chips to that country, the reprieve hasn't yet translated into a rebound in revenue.

Analysts largely looked past the outlook, with at least 10 firms raising their 12-month price targets after the results Wednesday. They raised the estimates by an average of 3% to $202.60, according to data compiled by Bloomberg, implying a gain of about 12% from Wednesday's close.

During a conference call with analysts Wednesday, the company’s leadership rejected the notion that interest in deploying AI infrastructure was flagging.

“The opportunity ahead is immense,” Chief Executive Jensen Huang said. “We see $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade.”

The company also approved an additional $60 billion in stock buybacks. Nvidia had $14.7 billion remaining under its previous repurchase plan at the end ofthe second quarter.

Sales in that period, which ended July 27, rose 56% to $46.7 billion. That compared with an average estimate of $46.2 billion. Though the gain added more than $16 billion in quarterly revenue from a year earlier, it was the smallest percentage increase in more than two years.

Second-quarter profit was $1.05 a share, minus certain items. Wall Street was looking for $1.01.