Nvidia (NASDAQ: NVDA) shares are falling Thursday after the company reported second-quarter earnings. The artificial intelligence (AI) leader’s stock was down 3.2% as of 10:15 a.m. ET, according to data from S&P Global Market Intelligence.

Nvidia reported second-quarter results after the market closed yesterday, delivering results that significantly beat most Wall Street targets. The company also provided third-quarter guidance that beat analysts’ average estimates. But expectations were sky-high ahead of the report, and comments from its investor conference call suggested investors may have to wait longer for the semiconductor giant’s next-generation Blackwell processors.

Nvidia shares fall despite stellar Q2 results

Nvidia posted non-GAAP (adjusted) earnings of $0.68 per share on revenue of $30 billion in the second quarter of the current fiscal year, which ended July 28. Meanwhile, the average analyst estimate had called for the company to post adjusted earnings of $0.64 on revenue of $28.7 billion. The company’s revenue rose 122% year over year in the period, and adjusted earnings per share increased 152% compared to the same period last year.

It was a fantastic quarter for the company, with AI-related demand fueling another round of big growth from data center customers. Revenue for the segment increased 154% year over year, and strong selling prices for graphics processing units (GPUs) and accelerators in the category helped the company post an adjusted gross margin of 75.7%. That was slightly lower than the 78.9% margin it posted in fiscal Q1, but it still beat the company’s 75.5% margin target and indicated that Nvidia’s pricing power on its most advanced hardware remains very strong.

Strong Q3 forecast doesn’t overshadow concerns about Blackwell delays

For the third quarter, Nvidia forecast revenue of $32.5 billion, a target that beat the average Wall Street estimate of $31.7 billion in the period. The company also forecast an adjusted gross margin of 75%. While that suggests gross margin will decline on a quarterly basis, the decline appears to be very small and should actually ease concerns about pricing power.

But despite the strong second-quarter results and Q3 guidance, investors are focusing on some uncertainty surrounding the launch of Nvidia’s Blackwell processors. The company said production of its next-generation chip platform will ramp up in the fourth quarter of this year, suggesting the new processors could miss their initially announced 2024 release window and land in 2025.

The possibility that Blackwell could be delayed due to a design flaw was widely rumored ahead of Nvidia’s earnings report, so the possibility of the release being pushed back to next year isn’t shocking. But anticipation was so high leading up to the report that investors appear to be focused on the implication of a relatively brief delay rather than any signs that the company is otherwise firing on all cylinders.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Why Nvidia Shares Are Falling Today was originally published by The Motley Fool