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Nvidia, the AI powerhouse has outperformed all the estimated metrics in its Q2 earnings release on late Wednesday. The giant posted earnings per share (EPS) of $0.68, above the expectations of $0.65, and revenues of $30 billion, surpassing the expectations of $28.9 billion. As a result of which, its annual revenue growth now stands at 122%.
The anticipation over the launch of the Blackwell chips later this year is also a key driver of NVIDIA’s earnings outlook. To sustain its upward trajectory, it is crucial for Nvidia to achieve its projected targets for the third and fourth quarters. Moreover, the company anticipates revenue of $32.5 billion in Q3, which is also above the estimated $31.9 billion.
AI Market Becoming Increasingly Competitive
NVIDIA might soon face challenges ahead as the AI chip market becomes increasingly competitive. Startups like Cerebras, d-Matrix, and Groq are also gaining traction, securing large investments to enhance their product offerings and compete in the AI hardware space. Major tech companies such as Microsoft, Meta, Amazon, Alphabet, and OpenAI, which currently rely on the firm’s forthcoming Blackwell processors, are also developing their own AI chips.
The generative AI wave has rapidly made Nvidia one of the world’s most powerful companies. The company is now the second-largest in the U.S. by market cap, which has grown nearly $2 trillion this past year to just north of $3.1 trillion.
NVDA, AI Tokens Fail To Rally
In the expectations of positive Nvidia Q2 earnings, AI-related cryptocurrencies surged last week, with some tokens posting up to 60% gain. However, after the higher-than-estimated earnings report on Wednesday, AI tokens failed to rally, with the top 7 all trading in the red in the past 24 hours. The tokens appear to be mirroring similar moves in NVDA and Bitcoin (BTC).
Despite these strong numbers in the NVIDIA earnings report, shares of the chip giant were down about 2.10% trading at $125.61 and 6.81% down in after-hours trading at $116.88
The Near Protocol (NEAR), Internet Computer (ICP), Artificial Superintelligence (FET), RENDER and Bittensor (TAO) are all down on the day. Another reason for the tokens’ failure to rally could be that investors already priced in the higher-than-estimated earnings considering last week’s price surges within the sector.
DoJ Case Might Impact Nvidia’s Strategies
Despite the positive earnings report of Nvidia, there is an investigation by the US DoJ into potential anti-competitive practices. The inquiry centers on whether the company has leveraged its market dominance unfairly, which could result in significant legal and regulatory implications for the company. Any Adverse findings could seriously impact its future strategies and market position.