NVDA Q3 CY2025 Deep Dive: AI Infrastructure Demand and Product Expansion Drive Growth

Leading designer of graphics chips Nvidia (NASDAQ:NVDA) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 62.5% year on year to $57.01 billion. On top of that, next quarter’s revenue guidance ($65 billion at the midpoint) was surprisingly good and 4.2% above what analysts were expecting. Its non-GAAP profit of $1.30 per share was 3.8% above analysts’ consensus estimates.

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StockStory’s Take

Nvidia’s third quarter was characterized by strong demand for its AI hardware and software, resulting in better-than-expected financial results and a positive market reaction. Management credited the surge in data center revenue to the rapid adoption of new GPU architectures such as Blackwell and continued momentum across hyperscaler and enterprise clients. CFO Colette Kress emphasized that the company is “still in the early innings” of platform shifts toward accelerated computing and AI, adding that customer demand continues to outpace supply. CEO Jensen Huang highlighted the broadening impact of generative and agentic AI, noting, “We excel at every phase of AI, from pre-training and post-training to inference.”

Looking ahead, Nvidia’s optimistic guidance is anchored by expectations of continued AI infrastructure investments and further product launches, particularly around next-generation GPU platforms. Management believes that the transition to accelerated computing and AI adoption across industries will remain key growth drivers. Kress stated the company is preparing for “significant growth ahead,” while Huang pointed to expanding partnerships and product leadership as factors supporting long-term opportunities. The company is focused on holding gross margins steady despite input cost increases and is ramping up supply chain investments to meet anticipated demand.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to accelerated adoption of new GPU platforms, expansion in the data center market, and strategic partnerships with major AI developers and hyperscalers.

• Data center revenue surge: The company’s data center segment, driven by the Blackwell and GB 300 GPU ramp, achieved record revenue as hyperscalers and cloud service providers upgraded infrastructure to support large-scale AI workloads. Management noted that the installed base—including previous generations like Hopper and Ampere—remains fully utilized, indicating ongoing demand across product cycles.
• Enterprise and industry partnerships: Nvidia secured multiple AI factory and infrastructure projects spanning various industries, including collaborations with companies such as AWS, xAI, Humane, and Anthropic. The company highlighted new large-scale deployments, like xAI’s Colossus Two data center and Lilly’s AI factory for drug discovery, as evidence of broader adoption beyond traditional tech customers.
• Networking momentum: The networking business, essential for high-performance AI clusters, recorded significant growth, with NVLink, InfiniBand, and Spectrum X Ethernet switches increasingly adopted by major hyperscalers. Management stressed that Spectrum XGS technology, introduced this quarter, is enabling gigascale AI deployments, reinforcing Nvidia’s position as a core infrastructure provider.
• Geopolitical and regulatory challenges: Restrictions on advanced GPU exports to China impacted sales in that region, but management emphasized ongoing engagement with U.S. and Chinese authorities, underscoring efforts to diversify demand across geographies and industries and their commitment to advocating for America’s ability to compete globally.
• Supply chain and capacity investments: Inventory and supply commitments increased sequentially as Nvidia readied for future demand. The company is working with key partners like TSMC (with whom Nvidia celebrated the first U.S.-produced Blackwell wafer) and Foxconn to expand production capabilities, reflecting a focus on global supply chain resilience.

Drivers of Future Performance

Nvidia expects continued AI infrastructure investment and new product launches to drive revenue growth and support stable gross margins, despite rising input costs.

• AI infrastructure buildout: Management anticipates ongoing investment by hyperscalers, sovereign entities, and enterprises in AI-capable data centers, citing broad demand for both training and inference workloads. CEO Jensen Huang stressed that transitions to accelerated and generative computing are fueling hardware upgrades and expanding use cases across industries.
• Product roadmap and innovation: The upcoming Rubin platform and specialized products like CPX are expected to extend Nvidia’s competitive edge, with management highlighting performance and efficiency improvements as central to customer adoption. The company is also deepening technical partnerships with leading AI developers, which could increase the total addressable market.
• Margin management and cost pressures: CFO Colette Kress acknowledged rising input costs, particularly for memory and system components, but indicated the company is focused on holding gross margins in the mid-seventies by optimizing product mix and improving operational efficiency. Continued investment in R&D and supply chain capacity is expected to support future product launches and market expansion.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) the pace of adoption for new GPU platforms such as Rubin and CPX, (2) the ability of Nvidia’s supply chain to keep up with demand and mitigate component cost pressures, and (3) the impact of geopolitical developments, particularly export restrictions, on sales diversification. Execution on large-scale industry partnerships and progress in networking technology will also be important markers of success.

Nvidia currently trades at $193.12, up from $186.96 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

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