Nvidia Corp reported lower-than-expected quarterly revenue in its fast-growing data center and automotive businesses, overshadowing a strong profit beat driven by sales of gaming devices such as Nintendo Co Ltd's Switch.
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Nvidia shares were down 5 percent in extended trading on Thursday.
The company's shares have surged more than 181 percent over the past year, one of the strongest performances across the benchmark S&P 500 index.
"Nvidia was priced for perfection heading into earnings," said Loop Capital analyst Betsy Van Hees.
The company — which has been diversifying into newer technologies including self-driving cars and artificial intelligence — originally came into prominence in the gaming industry for designing graphics processing chips, that are also used for cryptocurrency mining.
Nvidia said revenue from its automotive business rose 19.3 percent to $142 million, but also fell short of analyst expectations of $146.2 million, according to financial and data analytics firm FactSet.
Revenue from Nvidia's data center business — which counts Amazon.com Inc's Amazon Web Services and Microsoft Corp's Azure cloud business among its customers — more than doubled to $416 million but missed estimates of $423.3 million, according to FactSet.
The company's net income more than doubled to $583 million, or 92 cents per share, in the second quarter ended July 30, from $261 million, or 41 cents per share, a year earlier.
Analysts had expected the company to earn 70 cents per share, according to Thomson Reuters I/B/E/S.
Operating expenses rose more than 20 percent, as Nvidia increased hiring for its growth initiatives, which Van Hees said was behind the pressure on shares as investors digest the increase in spending.
The Santa Clara, California-based company's revenue rose 56 percent to $2.23 billion, beating estimates of $1.96 billion.
Nvidia said on Thursday it expects revenue for the third-quarter to be $2.35 billion, plus or minus 2 percent. Analysts had expected third-quarter revenue of $2.13 billion.
(Reporting by Ismail Shakil in Bengaluru; Editing by Shounak Dasgupta)