The market takes another sign of relief after Nvidia printed another strong set of quarterly numbers, which largely met analyst expectations. The stock experienced volatile after-hours price action, bouncing between breakeven and an initial 5% selloff.
Nvidia's third quarter earnings cruised past consensus expectations, with data centre revenue more than doubling year-on-year to $30.7 billion or approximately 85% of Group earnings.
Revenue up 93.6% to $35.0 billion (5.5% ahead of $33.2bn consensus but some estimates ranged as high as $41 billion)
Data centre revenue up 112% to $30.77 billion (5.7% ahead of $29.1bn consensus)
Gross margin up 7 bps to 75.0% (3 bps ahead of consensus)
Operating margin up 257 bps to 66.3% (40 bps ahead of consensus)
EPS up 102.5% to $0.81 (8.0% ahead of $0.75 consensus)
Free cash flow up 137.9% to $16.7 billion (2.5% ahead of consensus)
Cash position up 110% to $38.5 billion in the third quarter
While the third quarter result was strong, the fourth quarter guidance was only marginally ahead of analyst expectations. As Bloomberg puts it – "[Nvidia] delivered a revenue forecast that failed to meet the highest expectations, suggesting that the company’s dizzying growth run has its limits."
For the December quarter, Nvidia said it expects to deliver:
Revenue of $37.5 billion vs. $37.0 billion consensus (~1% beat)
Gross margin of 73.5%, in-line with market expectations
Operating margin of 64.4% vs. 64.8% consensus (37 bp miss)
“The age of AI is in full steam, propelling a global shift to Nvidia computing,” said CEO Jensen Huang, adding that "demand for Hopper and anticipation for Blackwell — in full production — are incredible as foundation model makers scale pretraining, post-training and inference."
Some of the key highlights and takeaways from the conference call include:
AI and Robotics Transformation: The computing stack is shifting from traditional coding on CPUs to machine learning on GPUs.
Data Centre Infrastructure Shift: The $1 trillion installed base of traditional data center infrastructure is being rebuilt. The industry is projected to grow to $2-3 trillion by 2030.
Hopper and Blackwell: Hopper (H200) has seen exceptional demand, marking the fastest product ramp in the company's history. Blackwell is now in full production, with shipments exceeding expectations and demand accelerating. Hopper demand will persist but shipments may decline sequentially,
Blackwell Demand: CFO Colette Kress described demand for Blackwell as "staggering." Nvidia expects Blackwell demand to exceed supply for several quarters in 2026.
Production Challenges and Margins: Blackwell involves building seven custom chips, making production complex and costly. Margins will be lighter in the near term but are expected to return to the mid-70% range by the second half of next year.
Networking Revenue: Networking revenue was down sequentially but is expected to return to growth due to strong demand for Spectrum X, driven by AI needs.
AI Ecosystems and Robotics: Hundreds of AI-native companies are already delivering successful services, and thousands of startups are innovating. Investment in industrial robotics is surging, fueled by advancements in physical AI.
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