Nvidia blew past Wall Street financial targets in its third quarter, posting a 62% surge in revenue and forecasting continued strong growth for the current quarter with demand for its AI chips showing no sign of slowing down.
“Blackwell sales are off the charts, and cloud GPUs are sold out,” CEO Jensen Huang said in a prepared statement, referring the most advanced version of the company’s chip used by AI providers like Meta, OpenAI, Microsoft and Google. The strong demand led Nvidia to project fourth-quarter revenue between $63.7 billion and $66.3 billion, well above the $62.4 billion that analysts were expecting.
Nvidia’s stock rose as much as 5.7% in after hours trading, after finishing the regular session up 3%.
Nvidia’s better-than-expected results come as investors and industry observers worry about whether the red hot AI market is a bubble that could eventually bursts, with questions about whether AI services will generate sufficient revenue to keep pace with the staggering capital expenditures required to build and run next-generation models.
In a conference call with investors on Wednesday, Nvidia executives stressed the underlying strength of the market, citing “visibility” into massive amounts of spending for the next several years.
“We are preparing for significant growth ahead,” said Nvidia CFO Colette Kress on the call.
During the third quarter, sales in the company’s datacenter unit, which accounts for the vast majority of Nvidia’s business, expanded 66% year-over-year to $51.2 billion, compared to the $49.7 billion expected by analysts. Overall revenue of $57 billion was above Nvidia’s own projections and topped the $55.5 billion expected by Wall Street.
Nvidia posted $31.9 billion of net income in the third quarter, or $1.30 per share, compared to the $1.25 EPS expected by analysts.
Bubble talk
A pioneer of graphics processing chips, or GPUs, originally used for video games, Nvidia has emerged as the dominant provider of the processors that power generative AI services like ChatGPT and Google Gemini.
The company’s GPU chips are in high-demand among cloud providers and have are at the center of geopolitical issues like the U.S.-China trade war, with the U.S. having banned sales of the most advanced Blackwell chips to China.
Mounting power constraints, supply chain issues and fresh scrutiny of “circular” AI investments have also raised doubts about how sustainable the current trajectory really is. Analysts have warned about Nvidia’s role in a possible AI bubble — especially given the company’s $24 billion AI-investment blitz in 2025.
Case in point: In the deal announced Tuesday, Nvidia and Microsoft will invest up to $10 billion and $5 billion, respectively, in Anthropic. In turn, Anthropic will purchase $30 billion of Azure compute capacity, while also collaborating with Nvidia on future chip and model-engineering work. This follows Nvidia’s $6.6 billion investment in OpenAI in October and a $6 billion investment in Elon Musk’s xAI in November, per PitchBook, as well as its commitment to invest up to $100 billion in OpenAI in a massive September deal that sent the stock higher.
In recent weeks, investors have been reassessing expectations, said Daniel Newman, analyst and CEO of the Futurum Group: “Has there been too much exuberance? Is this demand real?”
Still, Nvidia’s results speak for themselves for those looking for optimism. Still, some analysts insist this isn’t a bubble. And analysts like Stephanie Link, chief investment strategist at Hightower Advisors, argues that the demand is fundamentally real — and far broader than Big Tech.
“I don’t think we are in a bubble in AI because there are so many industries that are seeing significant growth,” she said. “AI needs more data centers, an upgraded grid, and more power — which we don’t have enough of. Each industry will be spending billions: Big Tech $400B, industrials $100B building data centers, utilities $200B, and power companies $100B — and that’s just this year. The demand is there, unlike the dot-com bubble where there wasn’t real demand.”
