Nvidia Earnings Beat Lifts Asian Stocks for a Third Straight Day

A beat that reached across the Pacific

Nvidia beat expectations again in late August, and this time the effect showed up in markets well beyond Wall Street. On Thursday, August 27, Asian equities rose for a third straight session after the AI chipmaker said its quarterly revenue had more than doubled and gave a third-quarter forecast above analyst estimates.34 Shares of companies that make technology hardware led the gains. Investors also seemed willing to look past fresh US data showing that inflation, as measured by the Federal Reserve's preferred gauge, was still running hot.45

The headline numbers were clear. The finer details were less so: the size of the regional rally, the exact guidance figure and how Nvidia's own stock reacted all varied depending on when each report was written. Taken together, the coverage suggests the result had more fundamental weight than any recent Nvidia quarter. It also points to a slowdown in growth that investors will have to factor in.

The quarter by the numbers

Nvidia reported revenue of $96.22 billion for its fiscal second quarter, a record and a 106% rise from a year earlier, along with adjusted earnings of $2.22 per share.11 Analysts tracked by Visible Alpha had expected $92.37 billion in revenue and $2.10 per share.11 Other consensus sources had slightly different targets. Zacks put the bar at $2.09 per share, which made the beat a 6.22% earnings surprise and a 4.82% revenue surprise.14 A year earlier, Nvidia earned $1.05 per share on revenue of $46.74 billion.14 Over the past four quarters, Nvidia has beaten both the earnings and revenue consensus every time.14

Data centers again drove the quarter. Revenue in that unit rose 117% from a year earlier to $89 billion, against analyst forecasts in the $85 billion to $86 billion range.1112 CFO Colette Kress said hyperscale revenue more than doubled. Revenue from the AI clouds, industrial and enterprise group, known as ACIE, grew 138%.16 Edge computing, which covers gaming and physical AI, brought in $7.2 billion, above the roughly $6.6 billion analysts expected.16

Profit figures depend on the accounting basis. Nvidia reported GAAP diluted earnings of $2.46 per share, compared with the adjusted $2.22, and a gross margin of 75%.9 That margin matched expectations and was up from about 72.4% a year earlier. Operating expenses, however, rose 55%.11 Some secondary summaries of the quarter garbled these numbers, with one describing revenue growth as merely "20%+" and giving the wrong report date.13 Primary coverage consistently put growth at 106%.911

Guidance: strong, but how strong depends on the yardstick

The third-quarter outlook moved markets the most, and it is also where reports differed most. Several outlets put the guidance at $108 billion.1112 Another described a range of $105.8 billion to $110.1 billion, which centers on about $108 billion.16 One regional outlet reported the forecast as about $107 billion, plus or minus 2%.9 Most coverage, and the range itself, point to $108 billion as the better figure.

What counts as a beat also depends on which consensus a report used. Visible Alpha's analysts expected $105.39 billion.11 CoinDesk cited a Street forecast of $103.9 billion.12 Zacks's consensus for the coming quarter was $102 billion.14 Measured against any of these, the guidance beats comfortably. The gap of up to $6 billion between estimates also shows how much uncertainty there still is about Nvidia's near-term path.

Nvidia keeps beating its own forecasts too. In May, it guided to $91 billion for the quarter just reported, well above the LSEG consensus of $86.84 billion at the time.1920 It then delivered $96.2 billion, about $5 billion more than its own outlook. If that pattern holds, analysts will likely treat the $108 billion guide as a minimum.

Crossing the $100 billion line also matters. CoinDesk noted that only nine S&P 500 companies have ever reported $100 billion or more in quarterly revenue.12 Kress said Nvidia expects revenue to grow about 70% in its next fiscal year, though supply remains tight because of a shortage of memory parts.11

The caveats: margins and slowing growth

The stock's choppy after-hours trading reflected two concerns. First, Nvidia guided its next-quarter gross margin to 74%, down from 75%, which appeared to weigh on shares right after the release.12 Thomas Monteiro of Investing.com called it the first sequential margin decline of the current cycle. He tied it to rising memory, financing and infrastructure costs, and said customers facing their own higher spending and borrowing costs may push back on price increases.12

Second, growth is slowing. Analyst Luke Lango noted that year-over-year revenue growth had accelerated for five straight quarters to reach 106%, but that the third-quarter guide implies growth in the mid-to-high 80% range, and that quarter-over-quarter growth is also expected to slow.11 He did not see this as a reason to sell. He pointed to compute commitments that rose from $119 billion to $279 billion in a single quarter, plus more than $500 billion in new financing partnerships, as signs that AI infrastructure spending is not slowing.11

The stock's reaction is worth noting against recent history. After the May report, Nvidia shares fell for the fourth quarter in a row following earnings, even though it beat on revenue and guidance.20 At the time, eMarketer's Jacob Bourne said beats were essentially priced in, and that the real question was whether AI spending would hold up through 2027 and 2028 as competing chips from Google, Amazon, AMD and Intel gained ground.19 This time, the shares dipped slightly at first.11 Within hours, Reuters reported a 4.7% after-hours jump, which lifted S&P 500 futures by 0.3% to 0.4%.34 Later market data showed the stock down 1.59%, so even this rally faded in regular trading.1

How Asia traded it

The regional numbers changed as the session went on. Early reports had MSCI's broadest index of Asia-Pacific shares outside Japan up 0.7%, with South Korea's KOSPI up 1.5% and Taiwan up 0.9%.36 Later versions of the same Reuters report showed smaller gains: the MSCI index up 0.2%, the KOSPI up 1% and Taiwan up 0.3%.4 Japan's Nikkei 225 fell in both versions, by 0.3% to 0.4%.34 South Korean shares eventually closed more than 1% higher.1

The gains concentrated in places that supply Nvidia, which is the more telling detail. Pepperstone's Chris Weston said the business was in "absolutely rude health" and predicted that companies in Nvidia's supply chain would benefit.48 Taiwan and South Korea are home to much of the world's chipmaking and memory production, and they outperformed. Japan did not.

Economic policy held the rally back. The Bank of Korea raised its policy rate by 25 basis points to 3%, as markets narrowly expected, and that cut into the KOSPI's early gains.34 In the US, the PCE price index rose 0.2% in July after falling 0.1% the month before. Analysts at Societe Generale said the details were firmer than the headline figure going into the September Fed meeting.37

The takeaway

Nvidia's results say less about whether the company can beat estimates, which it does reliably, and more about whether investors in Asia still believe in AI spending. On that point, the results helped. The company beat its own guidance by about $5 billion, raised its outlook well past the $100 billion mark and reported a sharp rise in compute commitments.1112 Together, these give hardware suppliers across Taiwan and Korea more support from actual earnings than predictions of future demand could.

The risks are also visible. Gross margin is starting to slip, growth is slowing and Nvidia says memory shortages are limiting how much it can supply.1112 All of this comes as US inflation stays sticky and central banks in the region keep raising rates. The bigger risk for the AI supply chain now looks like higher financing costs rather than a drop in Nvidia's demand. Asia's rally on the news was real but modest, which suggests investors see it that way too.