Nvidia forecast fourth-quarter revenue above Wall Street estimates on Wednesday, on booming demand for its AI chips from cloud providers despite widespread concerns of an artificial-intelligence bubble.
The results from the AI chip design leader mark an important moment for investors, as global markets look to it to determine whether investing billions of dollars in AI infrastructure expansion has fuelled a bubble.
The world's most valuable company said it expected fiscal fourth-quarter sales of $65 billion, plus or minus 2 per cent, compared with analysts' average estimate of $61.66 billion, according to data compiled by LSEG.
The outlook indicates that demand remains strong for Nvidia’s artificial intelligence accelerators, the expensive and powerful chips used to develop AI models. Nvidia has faced growing fears that the heavy spending on such equipment is not sustainable.
Shares of the AI market bellwether jumped more than 4 per cent in extended trading. Before the results, doubts had pushed Nvidia shares down nearly 8 per cent in November, after a 1,200 per cent surge in the past three years. The broader market has declined almost 3 per cent this month.
“Blackwell sales are off the charts, and cloud GPUs are sold out,” chief executive Jensen Huang said.
“The AI ecosystem is scaling fast, with more new foundation model makers, more AI start-ups, across more industries and in more countries. AI is going everywhere, doing everything, all at once.”
Unlike prior quarters, Nvidia shares were trending lower, down about 6 per cent in recent sessions, before the results, so the bar to deliver had been lowered, said Neal Keane, head of global sales trading at ADSS.
“Nvidia delivered on all fronts, with earnings and revenue beating forecasts … while notably data centre sales topped forecasts,” he said.
Sales in the data-centre segment, which accounts for most of Nvidia's revenue, grew to $51.2 billion in the quarter that ended on October 26. Analysts had expected sales of $48.62 billion, according to LSEG data.
The company was also bullish in its forecast for the fourth quarter.
Sales are estimated to be up more than 10-fold from where they were in the same period three years ago. Nvidia is also on course to deliver more annual net income than two longtime rivals – Intel and Advanced Micro Devices – will report in sales, according to Bloomberg.
Last month, Mr Huang said Nvidia was set to deliver $500 billion in revenue over the next few quarters, driven by demand from large data centres.
On Wednesday, the company's chief financial officer Colette Kress indicated that Nvidia would probably beat the $500 billion target.
“There’s definitely an opportunity for us to have more on top of the $500 billion that we announced,” she said. “The number will grow.”
Big Tech, among Nvidia's largest customers, has persisted with spending to expand AI data centres as it commits to multibillion, multi-gigawatt centres. Microsoft reported a record capital expenditure of nearly $35 billion for its fiscal first quarter last month, with about half of it spent on chips.
“Nvidia’s blowout earnings and bullish guidance should spark a broad tech rally into year-end, with the recent pullback in global shares looking overdone,” said Mr Keane.
