Nvidia's second-quarter results and guidance have put it on the doorstep of becoming the first company in history to generate $1 trillion in annual revenue. The chipmaker's forecast for the next fiscal year points toward $700 billion to $800 billion in sales, up from just $27 billion a few years ago, though Amazon could still get to the $1 trillion mark first.
Nvidia's guidance points toward $1 trillion in sales
Nvidia blew past Wall Street estimates in its second-quarter earnings, sending shares back toward their all-time high of $225 and pushing the company's market cap to approaching $5.5 trillion, the largest of any company in the world. Revenue for the quarter that ended in August grew 106% to $106 billion, lifting trailing-12-month revenue to $303 billion.
The company is now projecting 70% revenue growth for its next fiscal year, which may push annual sales to $700 billion to $800 billion. That compares with just $27 billion in revenue in fiscal 2023. Nvidia would then only need about 40% growth the following year to eclipse $1 trillion in annual revenue.
Amazon could still get there first
Amazon may beat Nvidia to the milestone. The e-commerce and cloud giant is already at $775 billion in revenue and would need only two years of 15% growth to cross $1 trillion. Its sales grew 20% year over year last quarter, driven mainly by AI demand.
Nvidia's advantage is profitability. Its trailing operating margin stands at 65%, which would imply $650 billion in operating earnings if that margin holds at $1 trillion in revenue, up from $197 billion over the past 12 months.
Wall Street's reaction stayed selective
Nvidia's earnings reaction rippled beyond its own stock. The shares posted a post-earnings gain of approximately 8.7%, about 1.5 times what options markets had priced in. But the rally did not spread evenly across semiconductors: Marvell, another chipmaker tied to the AI and data-center buildout, fell approximately 10.3% after its own report.
That leaves the $5.5 trillion valuation hard to price. The math looks cheap against a potential $650 billion in future earnings, but that outcome depends on AI infrastructure spending continuing at its current pace.
Sources: The Motley Fool, investingLive
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