Nvidia Surpasses Expectations, Projects Massive AI Infrastructure Growth
Nvidia reported remarkable third-quarter results, exceeding both its own projections and Wall Street estimates, fueled by soaring demand for its chips powering the artificial intelligence boom. CFO Colette Kress indicated the company anticipates “growth ahead” as it capitalizes on the expanding AI market.
The company’s datacenter unit, the core of Nvidia’s business, saw a 66% year-over-year increase in sales, reaching $51.2 billion – surpassing the $49.7 billion analysts predicted. Overall revenue hit $57 billion, exceeding Nvidia’s forecasts and the Wall Street expectation of $55.5 billion. Net income for the quarter totaled $31.9 billion, translating to $1.30 per share, slightly above the anticipated $1.25 EPS.
Nvidia’s dominance in the AI chip market, initially built on its graphics processing units (GPUs) used for video games, has propelled its market capitalization to $4.5 trillion, making it one of the world’s most valuable companies. Its processors are essential for generative AI services like ChatGPT and Google Gemini, and are in high demand from cloud providers.
The company acknowledged rising input costs but expects to maintain gross profit margins in the mid-70s percentage range. CEO Jensen Huang highlighted Nvidia’s long-standing relationships with key AI developers, citing a partnership with OpenAI dating back to 2016, and even claiming to have delivered the “first AI supercomputer ever made” to the company. he defended Nvidia’s ample investments in AI companies, emphasizing the importance of ensuring its chips power leading AI models, stating, “We run OpenAI, we run Anthropic, we run xAI…We run them all.”
However, thes investments – including $6.6 billion in OpenAI in October, $6 billion in xAI in November, a potential $100 billion commitment to OpenAI in September, and a recently announced deal with Anthropic – have sparked scrutiny. Some analysts, like Daniel Newman of the Futurum Group, are questioning whether recent market exuberance is justified and if the demand is truly sustainable: “Has there been too much exuberance? Is this demand real?”
The new deal with Microsoft involves a combined $15 billion investment in Anthropic, with Anthropic committing to $30 billion in Azure compute capacity and collaboration with Nvidia on future chip and model engineering.Huang noted this deal will mark Anthropic’s first use of Nvidia chips, expanding the company’s ecosystem and securing a stake in a possibly highly successful venture.
Despite geopolitical challenges,including a U.S. ban on sales of advanced chips to China, nvidia reported essentially no datacenter chip sales to China in the third quarter, with no anticipated change for the current quarter.
