Nvidia earnings up 109% as AI demand rockets

Nvidia, the American chipmaker that has grown to become the world’s most valuable company, beat sales expectations for the third quarter as it hailed the “incredible” demand for its chips in the age of artificial intelligence.
Nvidia’s quarterly sales surpassed market expectations, as revenue rose 94 per cent year-on-year to $35.1 billion. Analysts had forecast sales of $33.2 billion. Net income, or profit, also surpassed Wall Street’s expectations, rising 109 per cent to $19.3 billion, ahead of analysts’ forecasts of $17.4 billion.
The chipmaker said it expects to achieve revenue of $37.5 billion in the next quarter, higher than consensus analysts’ estimates of $37.1 billion.
However, Nvidia’s shares fell $3.31, or 2.3 per cent, to $142.58 in after-hours trading as investors considered how much longer the chipmaker can continue delivering better-than-expected results.
Jensen Huang, 61, the founder and chief executive of Nvidia, said: “The age of AI is in full steam, propelling a global shift to Nvidia computing.” Demand for Nvidia’s latest chips was “incredible”, he added.
Traders were braced for market volatility ahead of Nvidia’s results, which ­influence investor confidence in companies investing heavily in artificial ­intelligence technologies and are among some of the biggest listed businesses on the S&P 500.
Nvidia was conceived in 1993 during a meeting between a trio including ­Huang at Denny’s restaurant in San Jose, California. It began by developing graphics processing units (GPUs) to transform computer graphics.
For decades, Nvidia’s GPUs were used to power the creation of high-resolution images used in video games. However, they are now being used to power big bets on the potential of AI to transform the way we live and work.
Nvidia’s chips are used by more than 40,000 companies, from carmakers and drug discovery businesses to weather forecasters and social media giants chasing superfast computing speeds to make the most of software developments such as generative AI.
Its customers include Amazon, ­Apple, the Google owner Alphabet, Tesla, Microsoft and Meta Platforms.
Big technology companies are buying Nvidia chips to build AI data ­centres, which power generative AI products such as OpenAI’s ChatGPT and Microsoft’s Co-pilot.
This month Nvidia’s valuation soared to $3.6 trillion, overtaking Apple to regain the crown of the world’s most valuable public company. The stock has risen 200 per cent so far this year.
Investors’ attention has turned to potential sales of Nvidia’s new Blackwell chip. Some analysts have predicted that customers will delay purchases of Nvidia’s earlier chip, the Hopper, to wait for the next-generation artificial intelligence chip.
Sales in the data centre division, which accounts for a majority of Nvidia’s revenue, grew 112 per cent to $30.8 billion in the third quarter, slower than the growth of 154 per cent reported in the previous quarter.
On an earnings call with analysts, Colette Kress, chief financial officer of Nvidia, said: “Blackwell demand is staggering, and we are racing to scale supply to meet the incredible demand customers are placing on us. Customers are gearing up to deploy Blackwell at scale.”
Huang said that Blackwell production is “in full steam” and the chip “is in good shape”.
He added: “We will deliver in this quarter more Blackwell than we had previously estimated. It is the case that demand exceeds our supply and that’s expected as we’re in the beginnings of this generative AI revolution.”