Nvidia forecast third-quarter revenue largely in line with market estimates on Wednesday, failing to impress investors who have driven a dizzying rally in its shares as they bet billions on the future of generative artificial intelligence.

Shares of the Santa Clara, California-based company fell 5%in extended trading. Nvidia’s stock, which closed down 2 per cent, have risen more than 150 per cent so far this year.

Investors had lofty expectations from the chipmaker, following a more than seven-fold surge in Nvidia's shares over the last two years - making it one of the biggest beneficiaries of a rally in AI-linked shares.

The company's capacity to surpass estimates faces increasingly greater challenges as each success prompts Wall Street to raise their targets even higher.

The company forecast revenue of $32.5 billion (€29 billion), plus or minus 2%, for the third quarter, compared with analysts’ average estimate of $31.77 billion, according to LSEG data.

Nvidia expects adjusted gross margin of 75 per cent, plus or minus 50 basis points, in the third quarter. Analysts on average forecast gross margin to be 75.5 per cent, according to LSEG data. It reported a 75.7 per cent gross margin in the second quarter versus an average estimate of 75.8 per cent.

Sales in Nvidia’s data center segment grew 154 per cent to $26.3 billion in the second quarter ended July 28th, above estimates of $25.15 billion. From the first quarter, it increased 16 per cent.

Total second-quarter revenue was $30.04 billion, beating estimates of $28.70 billion.

The company said it expects several billion dollars in revenue from its latest Blackwell chips in the fourth quarter, addressing wide-spread concerns of reported production delays hampering growth. - Reuters

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