By Clare Duffy, CNN
Photo: CFOTO via AFP
Nvidia has posted strong revenue and profits that exceeded Wall Street's expectations.
The closely watched result could prompt a sigh of relief across the stock market following growing concerns about an artificial intelligence bubble.
Nvidia's sales grew 62 percent year-over-year to $57 billion in the October quarter, ahead of the $54.9 billion Wall Street had projected, signaling that demand for AI chips remains strong even as more questions emerge about whether returns from the technology will keep up with the pace of AI infrastructure investments. It posted profits of $31.9b, up 65 percent from the year-ago quarter and also slightly above expectations.
"Blackwell sales are off the charts, and cloud GPUs are sold out," Nvidia chief executive Jensen Huang said in a statement, a message that echoes his earlier arguments that fears of an AI bubble are overblown.
The company also posted stronger-than-expected sales guidance of around $65b for the fourth quarter, another indicator that the AI spending spree isn't slowing anytime soon.
Nvidia's stock (NVDA) jumped 3.4 percent in after-hours trading immediately following the report.
Nvidia has become both the backbone and an emblem of the AI boom, with much of the industry's technology running on its chips. The world's most valuable public company has also been central to this year's stock market rally - it accounts for roughly 8 percent of the S&P 500 and its deals with other tech firms have helped fuel their stocks, too - meaning that nearly all investors and 401k holders stand to be impacted by Wednesday's (local time) results.
Fears of an AI bubble ahead of Nvidia's report had caused volatility across the stock market as investors adopted a risk-off attitude and dumped assets like bitcoin and AI stocks.
Shares of other tech stocks - including Meta, Microsoft, Amazon and Google - were in the green in after-hours trading following the Nvidia report, underscoring the chipmaker's impact on the wider market.
"This answers a lot of questions about the state of the AI revolution, and the verdict is simple: it is nowhere near its peak, neither from the market-demand nor the production-supply-chain sides for the foreseeable future," Thomas Monteiro, senior analyst at Investing.com, said in emailed commentary following the report.
At the heart of the bubble concerns are the circular funding deals that Nvidia and other chipmakers have formed with AI companies, such as a $100b investment in OpenAI in exchange for chip purchases that was announced in September. OpenAI chief financial officer Sarah Friar further raised eyebrows earlier this month when she suggested that the government should backstop the debt tech companies are taking on to build AI infrastructure - a statement the company later tried to walk back.
But the fears haven't stopped Nvidia from making more such deals. Anthropic on Monday committed to buying $30b in computing capacity from Microsoft Azure, running on Nvidia chips, in exchange for an investment in the AI lab from both tech giants.
Huang has repeatedly batted down bubble concerns. At the company's GTC AI conference last month, he told CNN that people's willingness to pay for AI tools indicates that the technology is "profitable," even if most tech firms are now reinvesting the money they're earning into new infrastructure.
The fact that Nvidia's business continues to hum isn't surprising given that tech giants such as Meta, Microsoft, Amazon and Google all indicated in their most recent earnings reports that they plan to continue hiking their AI infrastructure spending. Huang also laid out at GTC the company's plans to get its technology into even more areas of life - from cell phone towers to self-driving cars.
Nvidia chief financial officer Colette Kress sought to reinforce that AI is generating returns in the company's earnings call by taking the unusual tack of ticking through highlights from the chipmaker's partner's recent financial reports. At Meta, for example, AI recommendation systems are leading to "more time spent on apps such as Facebook and Threads;" Anthropic recently noted it expects to earn $7b in annual revenue this year; and Salesforce's engineering team is 30 percent more efficient now that it's using AI for coding, she said, among a long list of corporate customers she rattled off.
- CNN
