NVIDIA Corporation (NASDAQ:NVDA) reported record revenue for the second quarter ended July 30, 2017, of $2.23 billion, up 56 percent from $1.43 billion a year earlier, and up 15 percent from $1.94 billion in the previous quarter.

GAAP earnings per diluted share for the quarter were $0.92, up 124 percent from $0.41 a year ago and up 16 percent from $0.79 in the previous quarter. Non-GAAP earnings per diluted share were $1.01, up 91 percent from $0.53 a year earlier and up 19 percent from $0.85 in the previous quarter.

“Adoption of NVIDIA GPU computing is accelerating, driving growth across our businesses,” said Jensen Huang, founder and chief executive officer of NVIDIA. “Datacenter revenue increased more than two and a half times. A growing number of car and robot-taxi companies are choosing our DRIVE PX self-driving computing platform. And in Gaming, increasingly the world’s most popular form of entertainment, we power the fastest growing platforms – GeForce and Nintendo Switch.

“Nearly every industry and company is awakening to the power of AI. Our new Volta GPU, the most complex processor ever built, delivers a 100-fold speedup for deep learning beyond our best GPU of four years ago. This quarter, we shipped Volta in volume to leading AI customers. This is the era of AI, and the NVIDIA GPU has become its brain. We have incredible opportunities ahead of us,” he said.

Capital Return

During the first half of fiscal 2018, NVIDIA paid $758 million in share repurchases and $166 million in cash dividends. For fiscal 2018, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases.

NVIDIA will pay its next quarterly cash dividend of $0.14 per share on September 18, 2017, to all shareholders of record on August 24, 2017.

Q2 FY2018 Summary

NVIDIA’s outlook for the third quarter of fiscal 2018 is as follows:

  • Revenue is expected to be $2.35 billion, plus or minus two percent.
  • GAAP and non-GAAP gross margins are expected to be 58.6 percent and 58.8 percent, respectively, plus or minus 50 basis points.
  • GAAP operating expenses are expected to be approximately $672 million. Non-GAAP operating expenses are expected to be approximately $570 million.
  • GAAP other income and expense is expected to be an expense of approximately $2 million, inclusive of additional charges from early conversions of convertible notes. Non-GAAP other income and expense is expected to be nominal.
  • GAAP and non-GAAP tax rates are both expected to be 17 percent, plus or minus one percent, excluding any discrete items. GAAP discrete items include excess tax benefits or deficiencies related to stock-based compensation, which we expect to generate variability on a quarter by quarter basis.
  • Capital expenditures are expected to be approximately $65 million to $75 million.

Second Quarter Fiscal 2018 Highlights

During the second quarter, NVIDIA achieved progress in these areas:

Datacenter:

  • Announced and began shipping NVIDIA® Tesla® V100 GPU accelerators, the first GPU based on the new Volta architecture.
  • Unveiled new lineup of NVIDIA DGX™ AI supercomputers, with a large installation at Facebook.
  • Announced the NVIDIA GPU Cloud Platform, giving developers a comprehensive software suite for AI development.
  • Disclosed that the world’s 13 most energy-efficient supercomputers on the Green 500 list run on NVIDIA Tesla accelerators.
  • Announced partnerships with VW and Baidu to bring AI deeper into their organizations.

Gaming:

  • Introduced Max-Q, a design approach to make gaming laptops thinner, quieter and faster.
  • Collaborated with Activision and Bungie to bring Destiny 2 to the PC for the first time.
  • Expanded GeForce® Experience™ to China, at the ChinaJoy gaming conference.

Professional Visualization:

  • Introduced Project Holodeck, a photorealistic, collaborative VR environment.
  • Announced steps to bring AI to ray tracing to advance the iterative design process, including the launch of NVIDIA OptiX™ 5.0 SDK.
  • Launched NVIDIA TITAN X and NVIDIA Quadro® external GPU support for the 25 million creative professionals using thin and light notebooks.
  • Released the NVIDIA VRWorks™ 360 Video SDK, which enables high-quality, 360-degree live stereo streaming.

Automotive:

  • Toyota selected NVIDIA DRIVE™ PX for its next-generation autonomous cars.
  • Volvo and Autoliv selected DRIVE PX for self-driving cars targeted to hit the market by 2021.
  • ZF and HELLA, two leading automotive suppliers, announced a system based on DRIVE PX to deliver the highest NCAP safety ratings for cars.
  • Baidu announced that its Project Apollo open-source self-driving platform for the China market will use DRIVE PX.

Edge Computing:

  • Introduced the NVIDIA Isaac robot simulator for training intelligent machines in simulated real-world conditions before deployment.
  • Announced the NVIDIA Metropolis platform, used by more than 50 partners to make cities safer and smarter by applying deep learning to video streams.

Shares of Nvidia are down nearly 5% to $157.02 in after-hours trading Thursday. NVDA has a 1-year high of $174.56 and a 1-year low of $57.32. The stock’s 50-day moving average is $159.41 and its 200-day moving average is $126.75.

On the ratings front, NVDA has been the subject of a number of recent research reports. In a report released yesterday, Jefferies analyst Mark Lipacis reiterated a Buy rating on the stock, with a price target of $180, which implies an upside of 9% from current levels. On August 8, BMO’s Ambrish Srivastava reiterated a Sell rating on the stock and has a price target of $85.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Mark Lipacis and Ambrish Srivastava have a yearly average return of 28% and 13.5% respectively. Lipacis has a success rate of 75% and is ranked #10 out of 4628 analysts, while Srivastava has a success rate of 73% and is ranked #397.

Overall, 2 research analysts have rated the stock with a Sell rating, 5 research analysts have assigned a Hold rating and 17 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $158.05 which is -4.1% under where the stock opened today.