NVDA produces another impressive round of results
3min read NVIDIA (NVDA) delivered an exceptional Q3 earnings report, surpassing expectations on both EPS and revenue, while continuing to demonstrate remarkable growth across its key business segments. The company reported adjusted EPS of $0.81, exceeding the consensus estimate of $0.74, and revenue of $35.08 billion, a 94% year-over-year (YoY) increase that topped analyst estimates of $33.25 billion. Gross margins were a standout, coming in at 75%, in line with expectations, as the company benefited from a favorable product mix weighted toward its high-margin data center offerings.
A key highlight was NVIDIA's data center segment, which saw revenue surge by 112% YoY to a record $30.8 billion, exceeding estimates of $29.14 billion. This growth was driven by robust demand for the Hopper H100 architecture and early anticipation for the next-generation Blackwell platform, which the company expects to ship in Q4 of fiscal 2025. Networking demand also contributed meaningfully, with Ethernet solutions for AI gaining traction among cloud service providers and enterprises. Notably, data center compute revenue rose by 132% YoY to $27.6 billion, showcasing the increasing adoption of NVIDIA's AI-driven infrastructure.
Gaming revenue also delivered a solid performance, rising 15% YoY to $3.3 billion, fueled by strong demand for GeForce RTX 40 Series GPUs. NVIDIA's gaming segment continues to benefit from the integration of AI technologies into gaming experiences, including new features such as NVIDIA ACE for enhanced character interactions and game design. Professional Visualization revenue grew 17% YoY to $486 million, supported by the adoption of NVIDIA Omniverse in industrial and manufacturing applications.
The automotive segment was a bright spot, with revenue jumping 72% YoY to $449 million, driven by demand for NVIDIA's self-driving platforms. Automotive customers, including Volvo and Toyota, are increasingly leveraging NVIDIA's AI and Omniverse technologies to build next-generation electric vehicles and autonomous driving systems. The company also announced new initiatives in robotics and simulation, further diversifying its presence in emerging AI-driven industries.
Guidance for Q4 was conservative, with NVIDIA forecasting revenue of $37.5 billion (±2%), slightly above the consensus estimate of $37.1 billion. Gross margins are expected to remain strong at 73-73.5%, reflecting continued strength in high-margin segments like data center and gaming. The company highlighted ongoing supply constraints for both Hopper and Blackwell systems, noting that demand for Blackwell is expected to exceed supply well into fiscal 2026.
On the expense front, NVIDIA's operating expenses increased by 50% YoY to $3.05 billion on a non-GAAP basis, driven by higher compensation costs and investments in compute infrastructure. While expenses have risen significantly, the company’s profitability remains strong, with operating income more than doubling YoY to $23.28 billion, reflecting the scalability of its operations. Free cash flow was also impressive, reaching $16.79 billion for the quarter, underscoring NVIDIA’s ability to generate significant cash even amid rising costs.
The introduction of Blackwell, NVIDIA’s next-generation data center architecture, represents a major growth catalyst. Production for Blackwell systems is set to begin in Q4 of fiscal 2025, with demand already described as "incredible." NVIDIA’s leadership in AI and machine learning applications continues to position it as a dominant player in the tech ecosystem, with foundational innovations that are transforming industries and driving demand for advanced computing solutions.
CEO Jensen Huang emphasized the transformative impact of AI on industries and countries, noting that "the age of AI is in full steam." NVIDIA’s strong execution in areas like AI-driven industrial robotics, cloud computing, and telecommunications highlights its ability to capitalize on emerging trends. Partnerships with companies like Microsoft, Google, and Foxconn further validate its leadership in the AI ecosystem.
NVIDIA also continues to expand its footprint globally, with significant progress in regions like India, Japan, and Europe, where AI adoption is accelerating. Initiatives like Denmark’s largest AI supercomputer and SoftBank's AI platform in Japan demonstrate the global scalability of NVIDIA's solutions. Additionally, NVIDIA’s partnerships with consulting firms and enterprise clients underscore its role in driving AI adoption across various industries.
Despite some concerns about a deceleration in growth rates due to the "law of large numbers," NVIDIA remains well-positioned for continued success. The company’s shift toward high-growth areas like AI, machine learning, and autonomous technologies ensures a strong pipeline of opportunities. While supply constraints for Hopper and Blackwell systems could present short-term challenges, these issues also highlight the overwhelming demand for NVIDIA’s cutting-edge products.
Shares of NVDA are relatively flat following the news. The results and commentary were impressive but the company continues to point a relatively conservative outlook which does raise some questions around the rich valuation. Some slight margin pressures is adding to that headwind but, overall, this remains an impressive report and suggests that longs will stay long and those not involved will look for pullbacks to buy.
Overall, NVIDIA’s Q3 results underscore its leadership in the AI and computing markets, with strong growth across data center, gaming, automotive, and professional visualization segments. As the company enters Q4 with a robust pipeline and transformative innovations like Blackwell, it remains a cornerstone of the global shift toward AI and advanced computing. Investors will be closely watching NVIDIA’s execution in meeting surging demand while maintaining its impressive profitability and operational efficiency.