Nvidia Beats Forecasts Again, Even as Growth Inevitably Slows

Ever since Nvidia first revealed to the world how much it expects to profit from the rise of artificial intelligence in May 2023, the chipmaker has been the poster child of the AI-fueled stock market rally that has propelled the S&P 500 to historic highs. So much so, in fact, that each of the company's earnings releases since then has been considered a make-or-break moment for market momentum, with investors around the world biting their nails, hoping for more positive news from the company that quite literally powers the AI revolution. And so far, Nvidia has always delivered. On Wednesday, the company reported results for the third quarter of its fiscal year 2025 and once again it managed to beat Wall Street's lofty expectations. And yet, perhaps because investors are increasingly anxious over AI's staying power or because revenue growth slowed from 200+ percent to "just" 94 percent, Nvidia shares fell after the announcement and were down more than 3 percent in pre-market trading on Thursday.

In the three months ended October 27, 2024, Nvidia's revenue grew 97 percent from the same period a year ago, reaching $35.1 billion compared to its own outlook of $35 billion plus/minus 2 percent and analyst expectations of $33.2 billion. Once again, Nvidia's data center business was at the heart of the company's blowout quarter, as it saw a 112-percent jump in revenue versus a year ago and accounted for more than 87 percent of total sales. Net income amounted to $19.3 billion in the past quarter, which is more than three times the full-year profit for fiscal 2023, as Nvidia's gross margin remained very high at 75 percent. For the current quarter, Nvidia expects revenue of $37.5 billion, which would be a 70-percent increase over the same quarter of last year, as growth rates inevitably come back to earth.

“The age of AI is in full steam, propelling a global shift to Nvidia computing,” founder and CEO Jensen Huang said in a statement. Demand for Hopper and Blackwell - Nvidia's current and next-generation chips - is "incredible" according to Huang, who added that “AI is transforming every industry, company and country." Addressing fears of a possible delay of its highly-anticipated Blackwell chips, Nvidia CFO Colette Kress confirmed that the company would begin shipping this quarter and ramp up shipments throughout fiscal 2026. She did signal however, that Blackwell chips would likely be supply constrained for several quarters next year.