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Nvidia’s AI chip sales far exceeded Wall Street forecasts Results eased concerns about a potential slowdown in Big Tech AI spending continues to drive markets and the broader economy Nvidia stock rose more than 5% after earnings release
SAN FRANCISCO (AP) – Sales of NVIDIA, the computing chip fueling the boom in artificial intelligence, have soared beyond the lofty bar set by stock market analysts, a performance that may allay recent fears that the Big Tech boom will turn into a bust that will bring down the world’s most valuable companies.
The results, released late Wednesday, put into perspective the frenzy of spending on AI technology that has fueled the stock market and much of the broader economy since OpenAI released ChatGPT three years ago.
Nvidia has been by far the biggest beneficiary of the startup’s benefits, as its processors have been essential in building the AI factories needed to enable what has been described as the most dramatic technology change since Apple launched the iPhone in 2007.
But in recent weeks, there has been a growing sense that the lofty expectations for AI may have been too bubbly, potentially setting the stage for an unsettling downturn that could end as dramatically as the leap that took Nvidia from a company valued at less than $400 billion three years ago to one worth $4.5 trillion as of Wednesday’s close.
Nvidia’s fiscal third-quarter report from August to October could draw a sigh of relief among those worried about the worst-case scenario and help reverse the recent stock market downturn.
“There should be a huge sigh of relief in the market given the disturbing situation we’re experiencing,” said Sean O’Hara, president of investment firm Pacer ETF.
The company’s stock rose more than 5% in extended trading Wednesday after the numbers were released. If the stock trades similarly on Thursday, shareholder wealth could increase by about $230 billion in a single day.
Nvidia’s profit was $31.9 billion ($1.30 per share), up 65% year over year, and revenue was up 62% to $57 billion. Analysts polled by FactSet Research expected earnings of $1.26 per share and revenue of $54.9 billion. Additionally, the Santa Clara, Calif., company forecasts sales of about $65 billion for the current quarter, which runs from November to January, nearly $3 billion more than analysts expected, showing that demand for its AI chips remains strong.
Orders for Nvidia’s top-of-the-line Blackwell chips are “off the charts,” Nvidia CEO Jensen Huang said in a prepared statement, calling current market conditions a “virtuous cycle.” Nvidia Chief Financial Officer Collette Kress said on a conference call that by the end of next year, the company will have sold about $500 billion in chips designed for AI factories within 24 months, and Kress predicts that trillions more will be spent by the end of the 2020s.
In the preamble to a conference call that has become more like a state-of-the-artificial intelligence (AI) market speech, Huang seized the opportunity to push back against skeptics who doubted his thesis that the technology is at a tipping point that will transform the world. “People talk a lot about the AI bubble. From our perspective, it looks something very different,” Huang emphasized, celebrating the “depth and breadth” of Nvidia’s growth.
The positive results, optimistic comments and solid response reflect the vital role that Nvidia plays in the future direction of the economy. Mr. Huang has used his position to forge close ties with President Donald Trump, even as the White House has waged a trade war that has hampered the company’s ability to sell chips in China’s fertile market.
President Trump is increasingly looking to the technology sector and developments in artificial intelligence to achieve his economic policies. Despite President Trump’s claims that tariffs are generating new investment, much of the foreign capital is flowing into data centers for AI’s computing needs and the power equipment needed to run those data centers.
“It’s no exaggeration to say this is the most important stock in the world,” Jay Woods, chief market strategist at investment bank Freedom Capital Markets, said of Nvidia.
This boom has been a boon for many companies, not just Nvidia. Nvidia became the first company to surpass $5 trillion in market capitalization a few weeks ago, before recent bubble concerns caused its stock to fall by more than 10%. As OpenAI and other big tech giants adopt NVIDIA chips to build AI factories and invest in other services related to the technology, their fortunes are also soaring. Apple, Microsoft, Google’s parent company Alphabet, and Amazon all have market values in the $2 trillion to $4 trillion range.
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