Nvidia Q3 earnings report stronger than expected, alleviating investor pessimism
- Alexangel Ventura
- 2 days ago
- 2 min read
With the release of Nvidia's pivotal earnings report on Wednesday November 20th,
The chipmaker released its report just yesterday, indicating strong revenue growth to roughly $57 billion, above expectations; this is up 22% from Q2 and 62% YoY. This growth was exceedingly driven by data center revenue, which reached $51.2 billion, up 25% from Q2 and 66% YoY. Earnings-per-share, while less of an overperformance compared to other metrics, still rose to $1.30, above several cents from analyst expectations. In Q4, the company expects to gap up to $65 billion (roughly a 2% increase), and gross margin to reach 74.8% GAAP.
CEO Jensen Huang rode the momentum by praising his company's efforts to popularize the Blackwell lineup of artificial intelligence-powered chips. "Blackwell sales are off the charts, and cloud GPUs are sold out. Compute demand keeps accelerating and compounding across training and inference... The AI ecosystem is scaling fast - with more new foundation-model makers, more AI startups, across more industries, and in more countries," Huang said following the earnings report.
The Nvidia CEO's response held a lot of merit; for Nvidia's revenue surge has been fueled by its record innovations and investments into AI technology and infrastructure. The company has made surges in share price as a result of its usage of AI components across its products, leading to it surpassing $200 per share in value before falling slightly and leveling off. But, after this report, its stock surged 5% in the after hours of Wednesday.
Yet, the stock declined on Thursday, losing all of its gains from the day before, as its China sales deteriorated (with executives foreseeing very minimal profit in Q4. The stock recession was also attributed to a stronger-than-expected jobs report which reduced chances for a Federal Reserve interest rate cut in December.
Chris Zaccarelli, CIO of Northlight Asset Management, held a more moderate view than Huang on the report. "[Nvidia is] ground zero for the entire Artificial Intelligence build out," he said. "The largest technology companies in the world are extremely profitable and they are reinvesting billions of dollars into data centers, servers, and chips and the spending is real."
Yet, he warned that this may mask underlying concerns. "While a market pullback can happen at any time, as long as the economy can stay out of a recession, we expect the bull market to resume," he said.
Tech stocks previously began to fall as investors feared of high tech valuations and weaker AI demand. But after this report, their fears have been temporarily relieved as AI demand continues to tick higher, slightly justifying overvaluations more. Yet still, the technology market's volatility, such as through Bitcoin's double-digit percentage plummeting, shows that Big Tech is not resilient by any means, though it continues to reap greater returns.
