Nvidia’s results ease concerns over AI boom
Nvidia’s sales of the computing chips powering artificial intelligence have surged beyond the lofty bar set by stock market analysts.
The performance may ease recent jitters about a Big Tech boom turning into a bust that topples the world’s most valuable company.
The results announced late on Wednesday provided an update on the frenzied spending on AI technology that has been fuelling both the stock market and much of the overall US economy since OpenAI released ChatGPT three years ago.
Nvidia has been by far the biggest beneficiary of the run-up because its processors have become indispensable for building the AI factories that are needed to enable what is supposed to be the most dramatic shift in technology since Apple released the iPhone in 2007.
But in the past few weeks there has been a rising tide of sentiment that the high expectations for AI may have become too frothy, setting the stage for a jarring comedown that could be just as dramatic as the ascent that transformed Nvidia from a company worth less than 400 billion dollars three years ago to one worth 4.5 trillion dollars today.
Nvidia’s report for its fiscal third quarter covering the August-October period now seems likely to elicit a sigh of relief among those fretting about a worst-case scenario.
The company, run by chief executive Jensen Huang, saw its stock price gain more than 4% in Wednesday’s extended trading after the numbers came out.
Nvidia earned 31.9 billion dollars, or 1.30 dollars per share, a 65% increase from the same time last year, while revenue climbed 62% to 57 billion dollars.
Analysts polled by FactSet Research had forecast earnings of 1.26 dollars per share on revenue of 54.9 billion dollars.
The California-based company predicted its revenue for the current quarter covering November-January will come in at about 65 billion dollars, nearly 3 billion above analysts’ projections, in an indication that demand for its AI chips remains feverish.
The incoming orders for Nvidia’s top-of-the-line Blackwell chip are “off the charts”, Mr Huang said in a prepared statement that described the current market conditions as “a virtuous cycle”.
The results reflected the pivotal role that Nvidia is playing in the future direction of the economy — a position that Mr Huang has leveraged to forge close ties with President Donald Trump, even as the White House wages a trade war that has inhibited the company’s ability to sell its chips in China.
Mr Trump is increasingly counting on the tech sector and the development of artificial intelligence to deliver on his economic agenda.
For all of Mr Trump’s claims that his tariffs are generating new investment, much of that foreign capital is going to data centres for AI’s computing demands or the power facilities needed to run those data centres.
“Saying this is the most important stock in the world is an understatement,” said Jay Woods, chief market strategist of investment bank Freedom Capital Markets.
The boom has been a boon for more than just Nvidia, which became the first company to eclipse a market value of 5 trillion dollars a few weeks ago, before the recent bubble worries resulted in a more than 10% decline.
As OpenAI and other Big Tech powerhouses snap up Nvidia’s chips to build their AI factories and invest in other services connected to the technology, their fortunes have also been soaring.
Apple, Microsoft, Google parent Alphabet and Amazon all boast market values in the 2 trillion to 4 trillion dollar range.
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