Chip giant Nvidia beat Wall Street expectations for revenue and upcoming sales, easing investor concerns about heavy spending on artificial intelligence (AI) that has rattled markets.
In its quarterly earnings report on Wednesday, the company said revenue for the three months through October rose 62% to $57 billion, driven by demand for its chips used in AI data centers. That division’s sales rose 66% to more than $51 billion.
Fourth-quarter sales forecasts in the range of $65 billion also topped estimates, sending Nvidia shares up about 4% in after-hours trading.
Nvidia, the most valuable company in the world, is seen as a bellwether of the rise of AI. The chipmaker’s results could influence market sentiment.
CEO Jensen Huang said in a statement that sales of its Blackwell AI systems were “off the charts” and that “cloud GPUs [graphics processing units] “They’re exhausted.”
“There has been a lot of talk about an AI bubble. From our point of view, we see something very different,” he said, in a call with analysts.
“We excel in every phase of AI.”
The chipmaker’s quarterly report attracted even more attention than usual on Wall Street amid growing concerns that AI stocks are overvalued.
Those fears had fueled four consecutive daily declines in the S&P 500 index through Wednesday, as questions arise about the returns on AI investments.
The bar was high for Nvidia’s results.
Adam Turnquist, chief technical strategist at LPL Financial, said the question was not whether the company would beat expectations, “but by how much.”
“As AI valuations dominate the news, Nvidia goes about its business in style,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
He said valuations of certain areas of the AI sector “needed to take a breather, but Nvidia is not in that field.”
Huang had previously said he expected $500 billion in AI chip orders over the next year. Investors were looking for details on when the company expects that revenue to materialize and how it plans to fulfill orders.
Colette Kress, Nvidia’s chief financial officer, told analysts that the company would “probably” accept more orders on top of the $500 billion that had already been announced.
But he also expressed disappointment at regulatory limits that hamper the company’s ability to export its chips to China, saying the United States “must earn the support of all developers,” including those in China.
He said Nvidia was “committed to continued engagement” with the US and Chinese governments.
Tech titans are increasing their spending on AI as they rush to reap the benefits of a boom that has sent stocks to record highs.
Earnings reports from Meta, Alphabet and Microsoft last month reaffirmed the colossal amounts of money these companies are shelling out on everything from data centers to chips.
Sundar Pichai, head of Google’s parent company Alphabet, told the BBC that while the growth in investment in AI had been an “extraordinary moment”, there was a certain “irrationality” in the current AI boom. His comments came amid other warnings from industry leaders.
Nvidia, which makes chips that are crucial for AI data centers, is at the center of a web of deals between key players in the AI space, such as OpenAI, Anthropic and xAI.
The deals have come under scrutiny for their circular nature, as AI companies increasingly invest in each other. The deals include Nvidia’s $100 billion investment in OpenAI, the company behind ChatGPT.
