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

• Nvidia's growth is apparently slowing down.
• It reported a 122% growth in quarterly revenue versus last year, down from 262% for the previous quarter.
• Though demand remains strong, the slowdown suggests Nvidia's GPUs are becoming a bit like Apple's iPhones.

This summer, investors have been fretting about the future of Nvidia .

The value of the tech giant at the center of the generative AI boom rocketed almost 800% from the start of 2023 to its peak in June as institutional and retail investors alike bet that its chip business would remain indispensable to companies building powerful AI models. It's now worth about $3 trillion and briefly became the world's most valuable company.

But since then, its stock has faced some volatile swings. It lost about $750 billion in the space of six weeks after its June peak as big customers like Google and Microsoft shared signs that their massive capital expenditure is unlikely to yield returns anytime soon.

So, as investors prepared to hear Nvidia report its second-quarter earnings after the bell on Wednesday, they were hoping for some answers on what the future might look like for one of the AI industry's most-hyped businesses.

Nvidia's response suggests it may start to resemble Apple's trajectory. Here's why.

Nvidia's future looks more like Apple's

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.

But in some ways, Nvidia — like Apple — is a victim of its own success . There are upper limits to any market, be it smartphones or GPUs.

"Even future guidance was raised, but again not by the tune from previous quarters," Chandler Willison, a research analyst at M Science, said in a note on Wednesday night. Nvidia is "a great company that is still growing revenue at 122%, but it appears the bar was just set a tad too high this earnings season."

Apple is more familiar with sluggish growth. After the explosive trajectory for iPhone sales between 2007 and 2015, growth slowed and has more recently contracted, according to data from Statista.

The smartphone maker has remained one of Silicon Valley's most robust companies despite its biggest revenue driver facing a slowdown in sales for a few reasons.

For one, the smartphone market has become increasingly saturated since the iPhone made its debut. Consumers have also become less enthused about buying devices that have seen only 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.

Optimistic

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.