Nvidia results beat estimates amid AI bubble jitters
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The world’s most valuable company Nvidia has reported its third quarter earnings, beating analysts’ estimates on the top and bottom lines and offering a better-than-anticipated outlook.
Nvidia has reported third quarter revenue of $US57 billion, up 62 per cent year on year, and topping average estimates of $US54.92 billion.
For the fourth quarter, the chip giant projects revenue of $US65 billion plus or minus two per cent. Wall Street was expecting revenue of $US62 billion.
Wednesday’s results provided a pulse check on the frenzied spending on AI technology that has been fuelling both the stock market and much of the overall economy since OpenAI released its ChatGPT three years ago.
Nvidia has been by far the biggest beneficiary of the run-up because its processors have become indispensable for building the AI factories that are needed to enable what’s supposed to be the most dramatic shift in technology since Apple released the iPhone in 2007.
But in the past few weeks there has been a rising tide of sentiment that the high expectations for AI may have become far too frothy, setting the stage for a jarring comedown that could be just as dramatic as the ascent that transformed Nvidia from a company worth less than $US400 billion three years ago to one worth $US4.5 trillion.
Nvidia’s report for its fiscal third quarter covering the August-October period now seems likely to elicit a sigh of relief among those fretting about a worst-case scenario.
The company’s stock price gained more than two per cent in Wednesday’s extended trading after the numbers came out.
The company’s stock price gained more than four per cent in Wednesday’s extended trading after the numbers came out.
Nvidia earned $US31.9 billion, or $US1.30 per share, a 65 per cent increase from the same time last year, while revenue climbed 62 per cent to $US57 billion.
Analysts polled by FactSet Research had forecast earnings of $US1.26 per share on revenue of $US54.9 billion. What’s more, the company predicted its revenue for the current quarter covering November-January will come in at about $US65 billion, nearly $US3 billion above analysts’ projections, in an indication that demand for its AI chips remains feverish.
The incoming orders for Nvidia’s top-of-the-line Blackwell chip are “off the charts,” Nvidia CEO Jensen Huang said in a statement that described the current market conditions as “a virtuous cycle.”
The results – and ensuring reaction – reflected the pivotal role that Nvidia is playing in the future direction of the US economy – a position that Huang has leveraged to forge close ties with President Donald Trump, even as the White House wages a trade war that has inhibited the company’s ability to sell its chips in China’s fertile market.
Trump is increasingly counting on the tech sector and the development of artificial intelligence to deliver on his economic agenda.
“Saying this is the most important stock in the world is an understatement,” Jay Woods, chief market strategist of investment bank Freedom Capital Markets.
The boom has been a boon for more than just Nvidia, which became the first company to eclipse a market value of $US5 trillion a few weeks ago, before the recent bubble worries resulted in a more than 10 per cent decline.
As OpenAI and other Big Tech powerhouses snap up Nvidia’s chips to build their AI factories and invest in other services connected to the technology, their fortunes have also been soaring. Apple, Microsoft, Google parent Alphabet and Amazon all boast market values in the $US2 trillion to $US4 trillion range.
with DPA
AP
