Nvidia Q3 Results: Stock declines even as revenue nearly doubles; guidance fails to meet expectations

Nvidia Q3 Results: Nvidia delivered blockbuster third-quarter results on Wednesday, with revenue nearly doubling amid unrelenting demand for its artificial intelligence chips. However, the company’s stock fell as much as 3% in limited after-hours trading, reflecting investor hesitation despite an improved outlook.

The company posted revenue of $35.08 billion for the quarter ending October 27, a staggering 94 per cent increase from $18.12 billion in the same period last year. Net income soared to $19.31 billion, more than doubling from $9.24 billion a year ago. Adjusted earnings per share came in at 81 cents, topping Wall Street expectations of 75 cents on revenue of $33.17 billion, according to FactSet.

“The guidance seems to show lower growth, but this may be Nvidia being conservative,” said Alvin Nguyen, an analyst at Forrester Research Inc. “Short term, there is no worry about AI demand. Nvidia is doing everything they should be doing," as quoted by Bloomberg.

The stock, which has already surged 195 per cent this year, reflects Nvidia's pivotal role in the AI boom. The company forecasts fourth-quarter revenue to reach $37.5 billion, slightly above analysts’ estimates of $37.09 billion, as per Associated Press report.

“The age of AI is in full steam, propelling a global shift to Nvidia computing,” said Jensen Huang, Nvidia’s founder and CEO.

AI Chips Drive Revenue, Supply Challenges Emerge

Nvidia’s data center revenue jumped 112% year-over-year to $30.8 billion, fueled by the Hopper computing platform, which supports large language models, generative AI, and recommendation engines. However, the company faces supply constraints for its next-generation Blackwell AI chips, critical for advanced AI applications.

Colette Kress, Nvidia’s Chief Financial Officer, revealed on an earnings call that Blackwell production will begin in the fourth quarter of fiscal 2025 and ramp up into fiscal 2026. “Demand for Blackwell is expected to exceed supply for several quarters,” Kress said, as quoted by AP.

Analysts view the Blackwell chip as essential for Nvidia to maintain its lead in the AI sector. Companies like OpenAI are among early adopters of the technology. Huang noted that Nvidia will deliver more Blackwell chips than previously estimated this quarter, signaling robust demand.