Nvidia Corp. delivered a surprisingly strong revenue forecast and pushed back on the idea of an AI bubble, easing concerns that had spread across the wider technology sector.
The world’s most valuable company expects sales of about $65 billion in the January quarter—roughly $3 billion more than analysts predicted. Nvidia also said that a half-trillion-dollar revenue bonanza due in coming quarters may be even bigger than anticipated.
The outlook signals that demand remains robust for Nvidia’s AI chips, crucial to run AI data centres. The Santa Clara, California-based firm had faced growing fears in recent weeks that the runaway spending on such equipment was not sustainable.
“There’s been a lot of talk about an AI bubble,” Chief Executive Officer Jensen Huang said on a conference call with analysts. “From our vantage point, we see something very different.”
The upbeat commentary sent shares up about 5% in late trading. They had gained 39% this year through the close, leaving the company’s market value at $4.5 trillion.
Nvidia results lifts AI stocks
Nvidia results have become a barometer for the health of the AI industry, and the news lifted a variety of related stocks. CoreWeave Inc., a provider of AI computing, gained more than 9% in extended trading. Its peer Nebius Group NV climbed more than 8%.
“Markets are reacting very positively to the news that there is no slack in AI momentum,” Brian Mulberry, senior portfolio manager at Zacks Investment Management, said in a note. His firm owns Nvidia shares. “Demand for Nvidia hardware solutions remains strong,” he said.
Nvidia’s CEO had said last month that the company has more than $500 billion of revenue coming over the next few quarters. Owners of large data centres will continue to spend on new gear because investments in AI have begun to pay off, he said.
Chief Financial Officer Colette Kress went further on Wednesday, indicating that Nvidia would likely eclipse 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 on the conference call. “The number will grow.”
Nvidia quarterly results
The growing role of AI will help maintain demand for Nvidia’s products, Huang said. The technology is helping speed up existing computing work, such as search. And it’s about to come to the physical world in the form of robots and other devices.
Nvidia’s third-quarter results also topped analysts’ estimates. Revenue rose 62% to $57 billion in the period, which ended 26 October. Profit was $1.30 a share. Analysts had predicted sales of $55.2 billion and earnings of $1.26 a share.
Nvidia’s main data centre unit had revenue of $51.2 billion in the quarter, compared with an average estimate of $49.3 billion. Chips used in gaming PCs—once the company’s chief source of revenue—delivered sales of $4.3 billion. That compares with an average estimate of $4.4 billion.
The forecast for the latest quarter reflects a staggering run for the company. Sales will be up more than 10-fold from where they were in the same period just three years ago. And Nvidia is on course to deliver more annual net income than two longtime rivals—Intel Corp. and Advanced Micro Devices Inc.—will report in sales.
Nvidia’s China challenge
But Nvidia’s expansion has faced challenges. US restrictions on the shipment of advanced chips to China have largely locked Nvidia out of a massive market for its products.
Huang has lobbied Washington to overturn those rules—arguing that they’re counterproductive to the national security concerns they are meant to serve. But even after some rollback of the toughest elements, Nvidia isn’t currently projecting any sales from AI accelerators in China.
“Our forecast for China is zero,” Huang said in a Bloomberg TV interview. “We would love the opportunity to be able to reengage the Chinese market with excellent products.”
Nvidia’s ‘circular’ AI deals
Some investors also have expressed concerns about the structure of the megadeals that Nvidia has struck with customers. The transactions involve investments in startups such as OpenAI and Anthropic PBC, raising the issue of whether the pacts are creating artificial demand for computers.
Earlier this week, Nvidia and customer Microsoft Corp. said they’ve committed to invest as much as $15 billion in Anthropic. The startup has also pledged to purchase $30 billion of computing capacity from Microsoft’s Azure cloud service and will work with Nvidia’s engineers on fine-tuning chips and AI models.
On the conference call, Huang was questioned about the deals with OpenAI and Anthropic. Huang said Nvidia’s investment in OpenAI, which still hasn’t been finalised, will provide a good return, he said. Backing Anthropic, meanwhile, will help establish ties with a company that hasn’t been a big user of Nvidia’s technology, he said.
Nvidia vs Others
Some Nvidia rivals have grown more optimistic that they can finally challenge the company’s dominance in AI accelerators. Earlier this month, AMD predicted accelerating growth for its AI chip business and talked up the prospects for forthcoming products.
AMD, Broadcom Inc. and Qualcomm Inc. have all announced tie-ups with large users of Nvidia’s chips. And data centre operators are increasingly looking to use more in-house designs—an effort that would make them less dependent on Nvidia supply.
Huang on Wednesday said that the competitive pressure remains low. More customers are coming to Nvidia after trying out alternatives than ever before, he said. The complexity of AI computer systems has put Nvidia in a strong position, Huang said.
The CEO is also pushing to spread the use of AI across more of the worldwide economy. The CEO has embarked on a globe-trotting tour to persuade government bodies and corporations to deploy his technology.
Nvidia — Then & Now
Nvidia, founded in 1993, pioneered the market for graphics chips used to create realistic images for computer games. AMD is its only remaining major rival in that business.
Nvidia built its AI dominance by adapting that same chip architecture to crunch massive amounts of data—helping researchers create software that’s begun to rival and resemble human capabilities.
The Santa Clara, California-based company still has more than 90% of the market for AI accelerator chips. It’s added other products to that lineup to help solidify its edge, including networking, software and other services.
“Business is very strong,” Huang said in the interview. “We have done a good job planning for a very strong year.”