NVIDIA Earnings: Good or Bad?

It’s finally nearing time to wrap up the Q3 earnings cycle with the release of the NVIDIA NVDA results, which also reflected the last Mag 7 release.

The entire market was watching the release like a hawk, given its status as the poster child of the AI frenzy, likely the most critical Q3 release of all.

But was the print good or bad? Let’s take a closer look at the release.

NVIDIA Results Reflect Reality

NVIDIA yet again posted a double-beat relative to our consensus expectations, with sales of $57 million growing 62% alongside a 67% jump in EPS. Unsurprisingly, it reflected a record-setting release yet again, with both overall and Data Center sales breaking previous records.

And concerning the Data Center, revenue of $51.2 billion grew 66% from the year-ago period, notably reflecting an acceleration on a YoY basis relative to the prior period (+56%), also crushing our consensus estimate of $49.1 billion. Jensen Huang, CEO, on the results –

‘Compute demand keeps accelerating and compounding across training and inference — each growing exponentially. We’ve entered the virtuous cycle of AI. The AI ecosystem is scaling fast — with more new foundation model makers, more AI startups, across more industries, and in more countries. AI is going everywhere, doing everything, all at once.’

Below is a chart illustrating NVDA’s Data Center revenue on a quarterly basis.

Simply put, the snowball of demand is only continuing to grow, dousing fears of a potential AI ‘bubble’. Companies across all industries want their hands on AI GPUs, as reflected in the robust growth rates and bullish roadmaps NVIDIA consistently paints.

Keep in mind that NVIDIA is partnered with many notable tech titans to help build their AI infrastructure, including Google Cloud, Microsoft, and Oracle. The revenue implications just here are massive, and newer, improved products (Blackwell) for the revolution also keep companies hungry for new ‘shiny toys’.   

In the release, it was stated that –

‘NVIDIA Blackwell achieved the highest performance and best overall efficiency in the SemiAnalysis InferenceMAX benchmarks, while delivering 10x throughput per megawatt compared with the previous generation.’  This simply means that Blackwell is a lot more power-efficient and faster than the previous generation (Hopper). Why wouldn’t companies eventually want to upgrade?

To further drive home the point, the company is deeply involved not just with companies but also with many governments across the world. It has announced massive deals with the Kingdom of Saudi Arabia (KSA), the South Korean government and its industry leaders (Samsung, Hyundai), and the U.K. in 2025, to name a few. These deals aren’t small, either, with over 250k NVDA GPUs expected to expand South Korea’s underlying AI infrastructure.

Putting Everything Together

Fears of an AI bubble have cast a negative shadow over NVIDIA’s NVDA incredible story, with its Data Center results at the center of the flame.

While it’s more than reasonable to keep an eye out for red flags within the story, the results it’s been reporting do reflect reality. Companies are rapidly buying up AI GPUs to gear up for the revolution, and governments are also inking massive deals with the tech titan.

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This article originally published on Zacks Investment Research (zacks.com).

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