Nvidia shares rose after beating earnings expectations
Chip giant Nvidia beat Wall Street expectations for upcoming revenue and sales, alleviating investor concerns about heavy spending on artificial intelligence (AI) that has destabilized markets.
In its quarterly earnings report on Wednesday, the company said revenue for the three months through October jumped 62% to $57 billion, driven by demand for its chips used in artificial intelligence data centers. Sales from this division rose 66% to more than $51 billion.
Fourth-quarter sales expectations in the range of $65 billion also beat estimates, sending Nvidia shares up about 4% in after-hours trading.
Nvidia, the world’s most valuable company, is seen as a leader in the AI boom. The chipmaker’s results could benefit market sentiment.
CEO Jensen Huang said in a statement that sales of its Blackwell AI systems were “off the charts” and that “cloud GPUs [graphics processing units] “Sold.”
“There has been a lot of talk about an AI bubble,” he said on a call with analysts. “And from our point of view, we see something completely different.”
“We excel at every stage of AI.”
The chipmaker’s quarterly report received more attention than usual on Wall Street amid growing concerns that artificial intelligence stocks are overvalued.
These concerns have fueled four consecutive daily declines in the S&P 500 through Wednesday, with growing questions about the returns on artificial intelligence investments.
The bar was high before Nvidia’s results.
The question was not whether the company would beat expectations, but “by how much,” said Adam Turnquist, chief technical strategist at LPL Financial.
“While AI reviews dominate news feeds, Nvidia goes about its business in style,” said Matt Bretzman, senior equity analyst at Hargreaves Lansdown.
He said valuations in certain areas of the AI sector “need to take a break, but Nvidia is not in that camp.”
Hwang had previously said he expected $500 billion in orders for AI chips through next year. Investors were looking for details about when the company expects those revenues to pay off, and how it plans to meet orders.
Nvidia’s chief financial officer, Colette Kress, told analysts that the company “will likely” receive more orders in addition to the $500 billion already announced.
But she also expressed disappointment about regulatory restrictions hindering the company’s ability to export its chips to China, saying the United States “should have the support of every developer,” including developers in China.
She said Nvidia is “committed to continued engagement” with the US and Chinese governments.
Tech giants are ramping up their spending on artificial intelligence, as they rush to reap the benefits of a boom that has pushed stocks to record levels.
Earnings reports from Meta, Alphabet, and Microsoft last month reaffirmed the massive amounts these companies spend on everything from data centers to chips.
Sundar Pichai, head of Alphabet, Google’s parent company, told the BBC that although the growth in AI investment was an “extraordinary moment”, there was some “irrationality” in the current AI boom. His comments came amid other warnings from industry leaders.
Nvidia, which makes chips that are critical to AI data centers, is at the center of a web of deals between major AI players such as OpenAI, Anthropic and xAI.
These deals have come under scrutiny due to their circular nature, as AI companies increasingly invest in each other. The agreements include Nvidia’s $100 billion investment in OpenAI, the company behind ChatGPT.