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Nvidia increased sales in its latest quarter of the chips at the heart of the artificial intelligence boom even faster than Wall Street anticipated, reassuring investors that the global AI spending spree is still going strong.
Chief executive Jensen Huang shrugged off market anxiety about the durability of AI spending after hundreds of billions of dollars were wiped off the value of tech stocks in recent weeks.
“There has been a lot of talk about an AI bubble. From our vantage point we see something very different,” Huang told analysts on Wednesday.
The world’s most valuable company reported its revenue rose 62 per cent year on year to $57bn in the three months to the end of October, beating consensus estimates of $55bn compiled by Visible Alpha.
Nvidia’s revenue forecast for the current quarter was $65bn, about $3bn more than Wall Street expected. Its shares climbed about 5 per cent in after-hours trading. Asian markets opened higher on Thursday, with Japan’s exporter-heavy Nikkei 225 index up 3.7 per cent and South Korea’s Kospi advancing 2.2 per cent.
Nvidia’s results are seen as a bellwether for the health of the AI sector because its advanced chips power cutting-edge models such as OpenAI’s ChatGPT.
Tech stocks have tumbled in recent weeks as investors fretted over the lofty valuations of big US tech groups and their huge capital expenditure on chips and data centres.
Nvidia’s shares had fallen 11 per cent from their peak in early November prior to Wednesday’s earnings report. SoftBank’s sale of its $5.8bn stake in Nvidia this month and well known short-seller Michael Burry’s warnings about an AI bubble shook investors’ confidence.
A spree of multibillion-dollar deals this year has enmeshed the $4.5tn chip group’s fortunes with most of its biggest customers, including through its investment of up to $100bn in OpenAI. Some analysts are concerned about the circular nature of these deals between a tight group of chipmakers, AI developers and cloud-computing providers.
Nvidia’s solid earnings boosted other tech stocks, with rival AMD rising about 4 per cent after hours and Alphabet, Amazon, Meta, Oracle and Microsoft all gaining.
Daniel Newman, chief executive of research company The Futurum Group, said the earnings showed the momentum around AI was “still intact”.
“While it’s hard to believe the demand is this stable and significant, at some point the doubters are going to have to start to believe,” he added.
In a regulatory filing, Nvidia warned for the first time that its customers’ ability to “secure capital and energy” for AI data centres was a potential brake on growth.
The Silicon Valley-based company said customers with less financial firepower “may face difficulties securing financing for large-scale infrastructure projects”, potentially causing delays and hitting AI adoption.
Nevertheless, Nvidia has continued to boost its financial forecasts. Its market capitalisation briefly surpassed $5tn at the end of October after Huang said the company had already booked more than $500bn in sales of its latest chips through to the end of next year.
Colette Kress, Nvidia’s finance chief, said future revenues could climb further, pointing to its deal to invest $10bn in Anthropic, which will see the AI start-up use Nvidia chips “for the first time”.
In an appearance at the US-Saudi Arabia investment forum earlier on Wednesday, Huang announced that Elon Musk’s xAI was joining Nvidia’s existing partnership with state-backed Saudi AI investor Humain, working on a new 500-megawatt data centre in Saudi Arabia that runs on Nvidia’s chips.
The US commerce department on Wednesday said it had approved the export of Blackwell chips to Humain and G42, the flagship AI company in the United Arab Emirates.
The authorisation for both companies to buy up to 35,000 chips came despite concerns from some US security officials about China obtaining advanced American AI-related technology from the UAE.
Nvidia’s growth comes despite being in effect shut out of China’s data centre market following a volatile year for trade relations between Washington and Beijing.
Nvidia said sales of its H20 chip, which had been customised for the Chinese market to meet US export controls, were “insignificant” due to Washington’s restrictions and pressure from the Chinese government on companies to use domestic alternatives. Nvidia did not include any potential China revenue in its outlook.
Net income for the most recent quarter rose 65 per cent year on year to $31.9bn, beating estimates of $30bn, with a gross margin of 73.4 per cent. Data centre revenue, which refers to Nvidia’s AI chip sales, was $51.2bn, above forecasts of $49bn.
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Nvidia said it saw “continued strong demand” for last year’s Blackwell chips even as it started to ship its successor, Blackwell Ultra, in significant volumes.
It expects its gross margin to hit 75 per cent in the current quarter as planned, after eroding slightly during 2025 due to the cost of launching its latest Blackwell technology.
Kress said the company was “working to hold gross margin” at around the same level into 2026 even as it launches its next chip, Vera Rubin.
Additional reporting by Demetri Sevastopulo