- Share price drifts as investors take a breather
- Age of AI in full steam, states CEO Jensen Huang
- Expect analyst upgrades to flood in
Whichever way you look at it, Nvidia's (NVDA:NASDAQ) Q3 earnings crushed it, surging past forecasts while continuing to demonstrate remarkable growth across its key business segments.
‘The numbers speak for themselves’, said AJ Bell investment analyst Dan Coatsworth. ‘Nvidia has beaten earnings and revenue forecasts for eight consecutive quarters. The scale of the latest beat was decent – earnings were 8% ahead of expectations, better than the 6.25% beat achieved in the previous quarter, although below the double-digit beats seen across four sets of quarterly results between May 2023 and February 2024.’
Having surged more than 40% since September, perhaps a pause for the share price is healthy. Nvidia stock is showing a 3% drift lower to $141.04 in the pre-maket, although that is just 5% off its $148.88 all-time high hit earlier this month.
DATACENTRE DEMAND BOOM
A key highlight was the Nvidia’s Data Center segment, which saw revenue surge by 112% year-on-year 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.
‘To say Nvidia is bullish about AI changing the world is an understatement’, says AJ Bell’s Coatsworth. ‘It used the term “incredible” 10 times in the analyst conference call and says demand for its Blackwell chip is “staggering”.
CEO Jensen Huang emphasised 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 capitalise on emerging trends. Partnerships with companies like Microsoft (MSFT:NASDAQ), Google-owner Alphabet (GOOG:NASDAQ), and Foxconn (2354:TPE) further validate its leadership in the AI ecosystem.
PRICING POWER
Q4 2025 guidance was conservative, with the chip designer forecasting revenue of $37.5 billion, slightly above the consensus estimate of $37.1 billion, while gross margins of 73% to 73.5% reflect how customers with serious AI intentions simply cannot do without Nvidia’s advanced technology.
‘The reason Nvidia’s trajectory will continue can be summarised in two words: pricing power’, says Beth Kindig, lead tech analyst at the IO Fund.
‘By coming to market with upgraded, more powerful GPUs on a now-annual cadence, with Blackwell Ultra, Rubin and Rubin Ultra soon to come, Nvidia will continue to be the largest beneficiary of Big Tech’s AI capex to an unprecedented degree as the company continually raises the bar on performance and total cost of ownership upgrades with each new generation.’
Expect analyst upgrades to flood in over the coming days.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Martin Gamble) own shares in AJ Bell.
