Last week, Nvidia Corporation (NASDAQ: NVDA) released its third quarter results, beating both sales and profit estimates and posting better-than-expected current quarter guidance as end customers including Microsoft Corporation (NASDAQ: MSFT), Open AI and Oracle Corporation (NYSE: ORCL), have started to receive its next-generation AI chip, the powerful Blackwell, which is now in full production.
For the quarter ended October 27, Nvidia reported that its revenue jumped 94% year-over-year to $35.08 billion, beating LSEG’s estimate of $33.16 billion. But this is a quarterly slowdown as sales increased by 122%, 262% and 265% respectively in previous quarters. The data center business, which is at the heart of the AI hype, brought in $30.8 billion, with sales up 112% year over year and beating StreetAccount’s estimate of 28%, 82 billion dollars. But not all of that revenue comes from the chips that power AI development, as $3.1 billion of that revenue was generated by networking components. The video game sector generated $3.28 billion in revenue. While the automotive and professional visualization businesses remain much smaller, automotive sales grew 72% year-over-year to $449 million, while the latter saw growth of 17% year-over-year, generating a business of $486 million.
Net profit more than doubled from the comparable quarter last year, amounting to $19.3 billion. While net income rose to 70 cents per share from 37 cents per share last year, adjusted earnings per share came in at 81 cents, also beating LSEG’s estimate of 75 cents. Thanks to the increased sale of chips, the gross margin increased to 73.5%.
Nvidia expects revenue of about $37.5 billion for the current quarter, plus or minus 2%. The outlook implies annual growth of around 70%, which is a slowdown from the comparable quarter last year, when growth was 265%.
Nvidia’s dominance in AI remains intact.
It’s a well-known fact that Nvidia is one of the biggest beneficiaries of the current AI hype, with shares nearly tripling since the start of the year. Blackwell’s shipments are expected to increase next year, but already in the current quarter, Nvidia accounts for “several billion dollars” of Blackwell’s revenue. Demand for Blackwell is expected to outstrip supply for several quarters over the next fiscal year. Now, how long Nvidia’s dominance in AI can continue to soar is another question that only time can answer.
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