Nvidia is still on fire — but its trajectory is looking a bit more like Apple

For some time, investors had been told the same story by Nvidia’s CEO Jensen Huang: that the generative AI boom was made possible thanks to his company’s chips, or GPUs, and with the tech sector all in on AI now, demand for them would keep flowing.

Nvidia’s first-quarter earnings this year reassured investors that this was very much the case. It reported quarterly revenue of $26 billion, up a staggering 262% from the same quarter a year ago.

Second-quarter earnings, however, seemed to be less reassuring. Nvidia shares fell 7% in after-hours trading on Wednesday after it reported a smaller 122% year-on-year increase in quarterly revenue of $30 billion.

It’s worth noting that this is a record for Nvidia. It has never generated as much revenue in three months as it has done in its last quarter. And guidance for the next quarter suggests a record will be set again.

This all points to Nvidia still being a business that is going strong, albeit one that is facing a slowdown similar to the one Apple has witnessed over the years.

The smartphone maker has remained one of Silicon Valley’s most robust companies despite its biggest revenue driver, the iPhone, facing a slowdown in sales for a number of reasons.

For one, the smartphone market has become increasingly saturated since the iPhone made its debut in 2007. Consumers have also become less enthused about buying devices that have seen iterative improvements each year.

It’s a big reason Apple’s net sales declined to $383.3 billion in its last full fiscal year, down from $394.3 billion the previous year.

Nvidia investors may not need to prepare for revenue to decline anytime soon, but the slower growth shared on Wednesday suggests the company could end up on a similar trajectory to Apple if growth continues to slow in future quarters. Both have underlying revenue drivers in motion, but with growth becoming less stellar than it had been in the past.

Huang, of course, is optimistic about demand rising later this year for the next-generation Blackwell GPU and has set Nvidia up for an annual chip release like Apple’s annual release of the iPhone.

With the generative AI boom expected to dominate the tech industry for years to come, GPUs will remain necessary purchases for companies seeking to lead on AI, meaning Nvidia shouldn’t see a sudden exodus of buyers.

Wedbush analysts including Dan Ives commented in a research note: “AI GPU demand is way outstripping supply for Nvidia at this juncture and the Street should come away from these results as a very bullish indicator for the broader tech sector with more shock and awe rather than a shrug of the shoulders in our view.”

That said, pressure is on Huang’s customers to prove to their investors that buying Nvidia GPUs will prove lucrative sooner rather than later. If they struggle to do that, expect demand to slow further.