Industry experts are working against Nvidia

What’s working against Nvidia, however, is skyrocketing investor expectations for the Silicon Valley chipmaker, especially as they’re anxious about the return on AI investments, analysts and industry experts told Business Insider.

“The numbers are stellar,” Emarketer analyst Jacob Bourne told Business Insider. “The problem is that investors keep raising the bar for Nvidia every quarter, and expectations have become unrealistic.”

Emarketer is a subsidiary of Axel Springer, which also owns Business Insider.

Similarly, Daniel Newman, CEO of The Futurum Group, a technology research firm, told BI that the numbers Nvidia showed in the second quarter were strong “but that level of good has already been priced in.” by investors.

By standard measures, Nvidia did more than fine this quarter.

The company reported revenue of $30.04 billion in the quarter, doubling its revenue from the same period last year and beating analysts’ expectations of $28.86 billion.

Still, those numbers received a tepid reaction on Wall Street.

What Newman described as “almost an irrational exuberance” around Nvidia was reflected in the company’s shares, which were down 6.9% after hours on Wednesday at press time.

According to Bloomberg, “Going into the options market, Nvidia’s results are expected to send its shares up nearly 10% in either direction in the session following the report.”

Questions also arose over concerns about delivery delays for the company’s Blackwell GPUs, which are expected to replace Nvidia’s Hopper, ahead of Wednesday’s earnings call.

“The recent delay in Blackwell’s go-to-market timeline has added to investor jitters,” Bourne told BI.

On Wednesday’s earnings call, Nvidia CEO Jensen Huang promised the company would ship billions of dollars worth of Blackwell GPUs by the fourth quarter — a measure that analysts warned was vague. Nvidia executives who participated in the call remained vague on the expected forward earnings from Blackwell, despite the questions being watched by investors.

“Saying they’re going to make a few billion dollars this year on Blackwell — that’s a pretty big range,” Grace Harmon, connectivity and technology analyst at Emarketer, told BI.

In general, experts said Nvidia has largely tempered any concerns about Blackwell shipping delays, but it will be critical for the company to deliver.

“We think it will be harder for the company to beat expectations by wide margins; however, the company should get a boost with the release of its new Blackwell chips later this year,” wrote Logan Purk, technology analyst at Edward Jones.

Even though high expectations could work against Nvidia, Huang continued to set a high standard for the company’s near future.

“Next year is going to be a great year. We expect to grow our data center business quite significantly,” Huang said on the call. “Next year, Blackwell will be a complete industry changer, and Blackwell will continue into the year ahead.”

Emma Cosgrove contributed to this report.