Nvidia Stocks Plummet $251 Billion Amid Gross Margin Concerns

Nvidia's stock price plummeted by 4.57% on Friday, wiping out $251 billion in market value. This decline comes after a significant rally of 8.7% on Thursday.

The company's fiscal third-quarter revenue guidance implies a 12.2% sequential growth, but the expected gross margin slips to 74.0%, down from 75.0%. This is a concern for investors, who still reward growth but now charge quickly for margin risk.

Nvidia's second-quarter revenue reached $96.2 billion, up 106% from the same period last year. The Data Center segment produced $89.0 billion, accounting for 92.5% of total revenue. Management forecasted $108.0 billion in third-quarter revenue, with a possible variance of 2%. However, this implies a decline in gross margin.

The company's valuation is around 12.1 times annualized third-quarter revenue guidance. This assumes sustained growth well beyond the current quarter. Management expects fiscal 2028 revenue to grow about 70%, which is higher than the consensus estimate of 40%.