NVIDIA Defies Expectations with Stellar Earnings but Faces Market Skepticism Over Growth Sustainability
1min read NVIDIA, the powerhouse in AI chips, has delivered another impressive earnings report, reinforcing its status in the AI-driven market surge. For the quarter ending October 27, NVIDIA achieved revenues of $35.082 billion, reflecting a year-over-year increase of 94%, surpassing market expectations. The net income under GAAP was $19.309 billion, a 109% rise from the previous year. The company's gross margin stood at 74.6% for the quarter, marking a slight year-over-year increase.
Looking forward, NVIDIA has projected revenues of $37.5 billion for the next quarter, which is above the market’s average expectations. The analysts' reactions suggest a slight caution regarding the rate of growth, noting that while the company's growth figures remain robust, they are showing signs of deceleration from previous highs.
CEO Jensen Huang emphasized the burgeoning demand for NVIDIA's advanced chips, particularly with the acceleration of the AI era. He highlighted the strong expected demand for both the Hopper and the now fully operational Blackwell chips. These advancements in AI are inspiring transformations across industries and countries, with companies adopting generative AI to revolutionize workflows and industries boosting investments in physical AI technologies.
NVIDIA's data center segment outperformed significantly, with revenues reaching $30.8 billion, exceeding projections and achieving substantial year-over-year growth. CFO Colette Kress noted a substantial increase in H200 chip sales and indicated aggressive deployment plans for Blackwell chips, although the demand is likely to outpace supply through multiple upcoming quarters.
Despite the optimistic revenue forecasts, NVIDIA's stock witnessed a decline in after-hours trading following the earnings release. This reaction perhaps hints at market concerns over the sustainability of NVIDIA's rapid growth trajectory amid evolving factors.
Analysts remain divided on their outlook for NVIDIA, while some highlight its monopolistic prowess and influence within the industry, others caution potential investors on the stock's valuation given its staggering appreciation of over 190% this year. Nevertheless, Blackwell's anticipated continued demand serves as a focal point for future growth discussions in the evolving AI landscape.