Nvidia Corp. reported sales that surpassed the lofty bar set by analysts in its latest financial results, easing some of the growing fears that the artificial intelligence boom may transform into a bust that cripples the world’s most valuable company, and perhaps the rest of the economy with it.

The AI chipmaker reported third-quarter earnings before certain costs such as stock compensation of $1.30 per share, beating Wall Street’s consensus estimate of $1.25. Revenue for the period leaped by an impressive 62%, to $57.01 billion, easily surpassing the $54.92 billion target. Nvidia’s net income came to $31.91 billion, up 65% from the $19.31 billion profit it posted a year earlier.

The company also offered strong guidance for the current quarter, saying it expects about $65 billion in revenue, well ahead of the Street’s $61.66 billion forecast. Nvidia’s stock gained more than 4% in after-hours trading following the report, on top of an almost 3% rise in regular trading before the report.

Since the AI boom kicked off in late 2022, Nvidia has emerged as its single biggest beneficiary, growing to become the world’s most valuable publicly traded company with a market capitalization of $4.55 trillion. It has grown immensely on the back of insatiable demand for its graphics processing units, which power AI training and inference workloads for customers, including OpenAI Group PBC, Microsoft Corp., Google LLC, Amazon Web Services Inc., Oracle Corp. and Meta Platforms Inc.

That’s why Nvidia’s earnings and revenue are closely watched by the rest of the technology industry, because its fortunes are viewed as one of the most accurate barometers of the health of the AI market.

No sign of an AI slowdown yet

On a conference call, Nvidia Chief Executive Jensen Huang (pictured) told analysts that sales of the company’s Blackwell GPUs are “off the charts” and all of its cloud GPUs are sold out. He added that the company sees compute demand accelerating and compounding across both AI training and inference. “There has been a lot of talk about an AI bubble,” Huang said. “From our vantage point, we see something very different.”

Nvidia’s key business is its data center unit, which generated $51.2 billion in sales during the quarter, up 66% from a year ago and cruising past the Street’s target of $49.09 billion. Within that segment, Nvidia said $43 million of that revenue came from “compute,” meaning sales of the company’s GPUs, with much of the growth being driven by the new GB300 Blackwell Ultra chips, its newest processors. Networking components, which are used to link scores of GPUs into massive clusters so they can work as one, generated $8.2 billion in sales.

Aptus Capital Advisors analyst David Wagner told SiliconANGLE that the magnitude of Nvidia’s revenue beat is likely to increase the hype around AI, if that’s possible, and ensure it remains at the front and center of the market for the foreseeable future. “It’s giving risk assets more of an all-clear sign into year-end,” he said. “Every investor has been waiting for an air pocket in demand, but supply looks like it is continuing to be the problem as the former continues to be off the charts, specifically in Blackwell and cloud GPUs.”

Nvidia Chief Financial Officer Colette Kress said Blackwell Ultra – the second-generation version of Blackwell – was the company’s best-selling GPU during the quarter.

The chipmaker’s results come just a couple of weeks after its megacap peers and customers, such as Amazon, Microsoft, Google and Meta, issued their own quarterly results, lifting their forecasts for capital expenditures yet again due to their ongoing AI data center buildouts. Collectively, those four customers now forecast spending of more than $380 billion this year, with much of it being spent on Nvidia’s hardware.

Huang confirmed this when he revealed that cloud GPUs have been sold out, explaining that the company has now secured over $500 billion in orders for through to the end of 2026. Kress added that the company expects the number to grow further.

Nvidia’s results suggest there is no slack in the AI market’s momentum, said Brian Mulberry of Zacks Investment Management. He stated his belief that the chipmaker is likely to continue growing and grab a “larger market space” for some time to come. “Nvidia is rapidly gaining traction in enterprise AI, expanding its market beyond cloud providers,” he said. “Major companies across industries are integrating its AI platforms to automate workflows, enhance productivity and improve decision-making.”

Concerns persist

But not every analyst was so optimistic about Nvidia’s prospects going forward. Yvette Schmitter, an “AI ethicist” and analyst of Fusion Collective, told SiliconANGLE that there are valid concerns about whether the rest of the industry can keep up with the rapid pace of Nvidia’s growth.

She said it’s telling that Nvidia announced a key deal with Anthropic PBC just one day before its earnings report. That deal saw the AI firm commit to $30 billion in Azure compute purchases from Microsoft, which in turn said it’s investing $15 billion in the company, matching an investment from Nvidia. “I don’t play poker, but I recognize a tell when I see one,” she said. “It’s managing expectations around a deployment crisis no one wants to name out loud. The AI revolution is real and unstoppable, but the electrical infrastructure to support it is still waiting on permits.”

She added that Nvidia is selling futures contracts backed by electricity that won’t flow through transmission lines for another three to seven years. “Financial engineering just lapped chip engineering, and Wall Street is still cheering the victory lap,” she said.

AI has become so critical to Nvidia’s business that it’s easy to forget the company was once best known for making chips primarily for video games consoles. During the quarter, the company’s gaming business – once its biggest segment – delivered $4.3 billion in revenue, up 30% from a year earlier.

Nvidia also has a legacy professional visualization business, which did a meager $760 million in sales during the quarter, up 56% from a year ago. One of its newer segments is robotics. The company has previously highlighted this as a key growth opportunity, and sales from the automotive and robotics segment hit $592 million, up 32% on an annual basis.

On the conference call, Kress said she was “disappointed” that the company is not able to ship its current generation Blackwell GPUs to China. While Nvidia has received an export license for its older H20 chips, it only generated $50 million of revenue during the quarter. “Sizable purchase orders never materialized in the quarter due to geopolitical issues and the increasingly competitive market in China,” she said.

The after-hours gain means that Nvidia’s stock is now up more than 38% in the year to date, outpacing the broader S&P 500 Index, which has gained just over 12% over the same period.

Photo: Nvidia/livestream