Nvidia shares jump after revenue and outlook beat estimates

Chip giant Nvidia beat Wall Street’s revenue and upcoming sales expectations, easing investor concerns about heavy artificial intelligence (AI) spending roiling markets.

In its quarterly earnings report published Wednesday, the firm said revenue rose 62% to $57 billion in the three months through October, driven by demand for chips used in artificial intelligence data centers. This division’s sales increased 66% to more than $51 billion.

Fourth-quarter sales estimates in the $65 billion range also beat estimates, sending Nvidia shares up nearly 4% in after-hours trading.

Nvidia, the world’s most valuable company, is seen as the pioneer of the artificial intelligence boom. The chipmaker’s results can provide insight into market sentiment.

Chief executive Jensen Huang said in a statement that sales of AI Blackwell systems were “off the charts” and that “cloud GPUs” [graphics processing units] sold out”.

“There’s been a lot of talk about the AI ​​bubble. From our perspective, we’re seeing something very different,” he said on a call with analysts.

“We excel at every stage of artificial intelligence.”

The chipmaker’s quarterly report garnered more attention than usual on Wall Street at a time when concerns are growing that AI stocks are overvalued; These fears may persist despite Nvidia’s blockbuster results.

Those fears triggered four consecutive days of declines through Wednesday for the S&P 500 index, as questions swirled about the returns on artificial intelligence investments. The benchmark index is down almost 3% so far in November.

The bar was set pretty high in Nvidia’s results.

Adam Turnquist, chief technical strategist at LPL Financial, said it’s not a question of whether the company will beat expectations, but “by how much.”

“As AI valuations dominate news feeds, Nvidia is going about it with style,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

He said valuations for certain areas of the AI ​​industry “need a pause, but Nvidia is not on that side.”

Mr Huang has previously said he expects $500 billion in AI chip orders by next year. Investors were looking for details about when the company expected those revenues to occur and how it planned to fulfill orders.

Nvidia’s finance chief Colette Kress told analysts the company will “probably” get more orders over the $500 billion already announced.

But he also expressed frustration over regulatory restrictions hindering the company’s ability to export its chips to China, saying the U.S. “needs to win the support of every developer,” including those in China.

He said Nvidia was “committed to continuing engagement” with the American and Chinese governments.

Tech giants are increasing their spending on artificial intelligence as they rush to take advantage of the rally that has sent stocks to record highs.

Last month’s earnings reports from Meta, Alphabet, and Microsoft reaffirmed the enormous amounts of money these firms spend on everything from data centers to chips.

Sundar Pichai, chairman of Google’s parent company Alphabet, told the BBC that while 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 produces vital chips for artificial intelligence data centers, is at the center of a network of agreements between major players in the artificial intelligence field such as OpenAI, Anthropic and xAI.

As AI firms increasingly invest in each other, the deals have come under scrutiny for their cyclical nature. The deals include Nvidia’s $100 billion investment in OpenAI, the firm behind ChatGPT.