It's hard to be the king of AI.
Nvidia showed in its latest earnings report that AI demand was still high, more than doubling its revenue from the same period last year and projecting $32.5 billion in revenue for the next quarter.
But that came as no surprise Wednesday to industry experts.
As large tech companies continued to inject billions of dollars into artificial intelligence, locking in demand for Nvidia's valuable chips, the multitrillion-dollar company was largely expected to post strong quarterly numbers.
And by standard measures, it did.
The company reported $30.04 billion in revenue for the second quarter, beating analyst expectations of $28.86 billion.
But its stock fell 6.9% in after-hours trading on Wednesday following the results.
What's working against Nvidia are the sky-high expectations investors keep setting for the Silicon Valley chipmaker, especially as they get antsy over returns on AI investments, analysts and industry experts told Business Insider.
"The numbers are stellar," Jacob Bourne, an analyst for Emarketer, told BI. "The problem is that investors keep raising the bar on Nvidia each quarter, and the expectations have become unrealistic."
Emarketer is a subsidiary of Axel Springer, which also owns BI.
Similarly, Daniel Newman, the CEO of the Futurum Group, a tech-research firm, told BI that the second-quarter numbers Nvidia showed were strong "but that level of good was already priced in" by investors. He described expectations as "almost an irrational exuberance."
Guidance for the current quarter failed to impress some investors as well.
Nvidia projected its third-quarter revenue would be about $32.5 billion, which was lower than investor expectations of a figure closer to $33 billion.
In a Wednesday note, Jefferies analysts deemed that revenue guidance "good, but not good enough."
Chip delays
Ahead of Wednesday's earnings call, questions also loomed over shipment delays for the company's Blackwell graphics processing units, which are expected to replace Nvidia's Hopper.
"The recent delay in Blackwell's market-release timeline added to investor jitters," Bourne said.
On Wednesday's earnings call, Nvidia CEO Jensen Huang promised that the company would be shipping out billions of dollars' worth of Blackwell GPUs by the fourth quarter — a metric that analysts said was vague. Nvidia executives on the call remained unclear about the gains expected from the Blackwell chip despite investor follow-up questions.
Overall, experts said that Nvidia had largely tempered any concerns around Blackwell shipment delays but that it would be crucial for the company to deliver.
Nvidia's earnings beat "fell short of expectations, which rose sharply into the print but the important point is that the Blackwell delay is in the rearview mirror," the Jefferies analysts wrote.
Logan Purk, a tech analyst at Edward Jones, wrote that Nvidia could struggle to widely beat expectations.
"However, the company should receive a boost with the launch of its new Blackwell chips later this year," he wrote.
Emma Cosgrove contributed to this report.
