Nvidia Surpasses Earnings Expectations as Investors Focus on Blackwell AI Chip Demand

Nvidia reported a significant increase in profits and sales for the third quarter, driven primarily by strong demand for its specialized computer chips used in artificial intelligence (AI) systems. In the three months ending October 27, the California-based tech giant generated $35.08 billion in revenue, a 94% year-over-year increase. Nvidia's profit for the quarter reached $19.31 billion, more than double the $9.24 billion from the same period last year. Despite Wall Street analysts expecting adjusted earnings per share of 75 cents and revenue of $33.17 billion, Nvidia's performance exceeded expectations.

Nvidia’s data center revenue reached $30.8 billion in the third quarter, marking a 112% increase, largely driven by the growing demand for its Hopper computing platform. This platform is essential for large language models, recommendation engines, and generative AI applications. Investors are particularly focused on the upcoming production of Nvidia’s next-generation AI chip, Blackwell, which is highly sought after by companies like OpenAI and others building AI data centers. Nvidia’s Chief Financial Officer, Colette Kress, stated that shipments of Blackwell chips will begin in the fourth quarter of fiscal year 2025, with production expected to ramp up further in fiscal year 2026.

Nvidia’s leadership in AI has made it one of the largest companies in the stock market, with tech giants across industries investing in its chips and data centers to train and operate their AI systems. Nvidia's early lead in the AI race can be attributed to its founder and CEO Jensen Huang’s keen judgment in chip technology. The company’s graphics processing unit (GPU), invented in 1999, helped drive the growth of the PC gaming market and redefined computer graphics. In the third quarter, Nvidia’s gaming revenue reached $3.3 billion, a 15% increase from the previous year. While its fourth-quarter guidance was slightly disappointing, the company has still achieved remarkable growth.