Despite record-breaking sales and positive financial forecasts, NVIDIA CEO Jensen Huang’s passionate remarks during the earnings call didn’t fully ease investor apprehensions about a possible AI bubble.
According to a report, NVIDIA, recognized as the world’s most valuable publicly traded company, unveiled remarkable results for the third quarter on Wednesday. Both profits and revenue surpassed analysts’ predictions, leading to a more than 4% increase in stock price during Thursday morning trading.
For the quarter, NVIDIA disclosed an adjusted earnings per share of $1.30, exceeding the anticipated $1.25. Revenue hit $57.01 billion, beating the consensus estimate of $54.92 billion. Additionally, the company projected a robust sales outlook of about $65 billion for the current quarter, outpacing analysts’ expectations, which were around $61.66 billion.
NVIDIA’s achievements largely stem from the relentless demand for its AI chips, or GPUs, utilized by major tech firms like Microsoft, Amazon, Google, Oracle, and Meta for developing new AI models. The company’s revenue and projections serve as vital indicators of the AI boom’s vitality within the tech sector.
In response to concerns regarding a potential AI bubble, Huang expressed, “From our point of view, it seems we have something distinctly unique.” Sales from the data center segment, which is pivotal for the company, were reported at $51.2 billion, significantly surpassing analysts’ estimates of $49.09 billion and marking a 66% increase year-over-year. Out of this revenue, $43 billion originated from GPUs, with a considerable portion attributed to early sales of the GB300 chip. Networking, which enables multiple GPUs to collaborate as a single unit, generated $8.2 billion in data center revenue.
Huang’s remarks align with investor Michael Varley’s concerns about the possibility of an AI bubble:
In a series of recent regulatory filings, Michael Barry’s Scion Asset Management disclosed acquiring put options on Nvidia and Palantir, signaling a bearish outlook on both firms. This information surfaced shortly after Barry shared a vague caution to retail investors regarding the market’s surge on social media, reminiscent of skeptical narratives surrounding potential bubbles.
Colette Kress, the finance director, noted that NVIDIA’s leading chip family is now the Blackwell Ultra, the second iteration of the Blackwell series. “Cloud GPUs are in high demand,” Huang emphasized, addressing worries about the company’s rapid sales growth to a limited number of hyperscale cloud providers.
In October, Huang mentioned that orders for NVIDIA’s AI chips could reach $500 billion by 2025 and 2026, with Kress suggesting further growth in that figure.
NVIDIA’s established sectors also showed strong performance, with gaming revenue climbing 30% year-over-year to reach $4.3 billion, while professional visualization sales surged 56% to $760 million. Their automotive and robotics segment, identified as a promising growth area, reported sales of $592 million, an increase of 32% compared to the previous year.
However, NVIDIA expressed frustration over not being able to ship the current generation of Blackwell chips to China due to geopolitical challenges and heightened market competition. Even with an export license for the H20 chip, the company recorded only $50 million in sales for the quarter.
Recent reports indicated that Huang stirred conversation by stating that China is likely to prevail in the AI race.
NVIDIA’s CEO, Jensen Huang, made a striking declaration at the Financial Times’ Future of AI Summit, suggesting that China is on track to triumph in the global AI competition. He pointed out the contrasting methods the two superpowers are employing, with China benefiting from lower energy costs and a more adaptable regulatory framework. Huang declared plainly, “China will win the AI race.”
His statements arrive amid ongoing tensions between the U.S. and China in the realm of advanced technologies, particularly in the semiconductor sector. The current administration has enforced a ban on NVIDIA’s sales of cutting-edge chips to China, which continues despite recent discussions between the U.S. President and China’s leader.
