Nvidia’s Financial Results Exceed Expectations
Nvidia’s third-quarter financial results beat analysts’ expectations, signaling that demand for its artificial intelligence chips remains robust. The chipmaker reported a third-quarter profit of $31.9 billion on record revenue of $57 billion. Sales increased 22% quarter-over-quarter and 62% year-over-year during the period. Earnings per share were $1.30, exceeding the expected $1.26 per share on revenue of $54.9 billion.
Strong Demand for AI Chips
Nvidia CEO Jensen Huang stated that "Blackwell sales are above average and cloud GPUs are selling out," referring to the company’s proprietary superchips that power large language models. Huang added that "the demand for computing in training and inference continues to expand and grow exponentially. We have entered the virtuous circle of AI. The AI ecosystem is scaling rapidly – with more new base model manufacturers, more AI startups, in more industries and in more countries. AI is going everywhere and doing everything at once."
Forecast and Market Reaction
Nvidia forecasts fourth-quarter revenue of $65 billion. The company’s shares, which have risen 39% this year, rose nearly 4% to $193.80 in after-hours trading. Dan Ives, an analyst at Wedbush Securities, said that "this is a great report and forecast from Nvidia that should reignite bullish tech trading through year-end," and believes that "fears of an AI bubble are far overblown."
Rational Exuberance
In recent weeks, some investors have expressed concerns about the hype surrounding AI and whether the rising market value of companies tied to the technology is justified. Despite the promise of AI, most companies implementing AI have not yet seen measurable increases in productivity or profits. Chris Zaccarelli, chief investment officer of Northlight Asset Management, said that "Nvidia results are such an important event, both because of the stock’s weighting in major stock indexes and because they form the starting point for the overall expansion of artificial intelligence."
Data Center Construction and AI Investments
Rapid data center construction across the U.S. has boosted demand for Nvidia chips. Data center investments, which include spending on AI research and development, made the largest contribution to US growth this year. The S&P 500’s 15% rise this year was driven largely by big tech companies with AI investments. Zaccarelli said that "market psychology was negative this month as investors feared that the buildout of artificial intelligence infrastructure was a bubble, and in a few years we may look back on this period and point to signs of that. But in the meantime, the world’s biggest tech companies are wildly profitable, investing billions of dollars in data centers, servers and chips, and the spending is real."
China Hurdle
Nvidia reported robust demand for its chips despite being locked out of the key Chinese market by U.S. export restrictions as the two nations compete in AI. Nvidia Chief Financial Officer Collete Kress said that the company was "disappointed" that it would not be able to ship products to China. Wedbush’s Ives expects export controls to be lifted in 2026 as the U.S. and China continue trade negotiations.
