Nvidia rides big tech’s AI investment to beat Wall Street’s sky-high expectations

Chipmaker Nvidia reported its latest financial results on Wednesday, recording $30.04bn in revenue over the past three months – a 122% jump from the year prior – and showing that artificial intelligence investment mania shows no signs of cooling.

Analysts had anticipated about $28.7bn in revenue. Shares slid more than 3% in after-hours trading.

In an earnings call, founder and CEO Jensen Huang said he expected Nvidia to ship “a lot more” chips and hardware next year than the company had in its 31-year history.

“The reason why our velocity is so high is simultaneously because the complexity of the model is growing, and we want to drive its costs down, and we want to increase the scale of AI models so that it will reach a level of extraordinary usefulness and realize the next industrial revolution,” he said.

Analysts welcomed the results, despite signs that Nvidia’s extraordinary sales growth might ultimately slow. “The company continues to benefit from a market paradox: big tech’s aggressive AI investment strategies drive massive demand for Nvidia’s chips, even as these same companies invest in developing their own silicon,” said Jacob Bourne, a technology analyst with Emarketer.

Nvidia has told customers that its next-generation AI chips, code-named Blackwell, will be delayed several months from January, though early samples are shipping to a small group of customers now. However, its current line of graphics processing units, nicknamed Hopper, continues to sell well, chief executive officer Jensen Huang said in a press release.

“Hopper demand remains strong, and the anticipation for Blackwell is incredible,” Huang said. “Nvidia achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.” The company’s data center revenue, its most closely watched financial metric, increased by 154% from a year ago to $26.3bn.

Recent earnings reports from Nvidia’s main big tech customers – Microsoft, Amazon, Meta and Google – which use the company’s chips to build and train their own AI models, indicated higher capital spending as AI demand continues to rise.

“As competitors like AMD intensify their efforts, the timely release of Nvidia’s next-generation Blackwell chip will be essential for maintaining its dominant position in the increasingly competitive AI chip market,” said Bourne.

The importance of Nvidia’s earnings results to Wall Street can hardly be overestimated – the company represents 6% of the total value of the S&P 500, currently the third most valuable company in the world by market capitalization at $3.1tn.

The index has gained 27% over the past 12 months, but Nvidia is individually up 167% over the same period. But because big tech is driving US stocks to new record highs, and because spending on Nvidia is seen as a signal of future tech earnings, Nvidia’s results are a key barometer of the US stock market.

The company also reported $0.68 in earnings per share and announced a $50bn stock buy-back. Analysts expected $0.64 per share for the quarter, compared to $13.5bn in revenue a year earlier. Profits were seen at $15.1bn, up from about $6.2bn a year earlier.

The company’s last earnings, released in May, showed quarterly growth of 18% and annual revenue growth of 262% . Against that extraordinary precedent, anything less than a repeat could be seen as a disappointment.

The Wedbush analyst Dan Ives called Nvidia’s earnings call “the most important week for the stock market this year and potentially in years”. Ives estimates that for every $1 spent on an Nvidia GPU chip, there is a $8-$10 multiplier across the tech sector.

“In a nutshell, we expect another drop-the-mic performance from Nvidia, as right now Jensen & Co are the only game in town with $1tn of AI cap-ex [capital expenditure] on the way for the next few years with Nvidia’s GPUs the new oil and gold in this world,” he added.

The expectations are so high, in fact, that Ameriprise Financial’s Anthony Saglimbene told Bloomberg that the results could have more impact on the overall market than Federal Reserve chair Jerome Powell’s speech last week at Jackson Hole, Wyoming.

But placing so much emphasis on a single stock itself rests on the concept that AI will boost global productivity over the coming decades.

The enormous $100bn annual investment into AI has yet to translate into profits for big tech, and its not yet clear when they will arrive. Conversely, a disappointing set of results could leads to doubts – and that we are at peak AI hype.

Related: Nvidia reports stratospheric growth as AI boom shows no sign of stopping

That’s led to comparisons to the late 1999 Internet bubble when the sector crashed but later recovered as the online world we know today on its skeletal remains.

In his market hand-holding mode, Ives said in a note that investors may worry about the huge spending, but the circumstances are more like 1995, when investment was pouring into the internet’s infrastructure, and not like 1999 when the bubble burst.

“Tech earnings season has only bolstered and validated this bullish view of tech stocks heading into year-end and 2025,” Ives says.

As with Microsoft in the early 2000s, regulators are hovering over Nvidia. Earlier this month, the US Department of Justice launched an antitrust investigation into the tech giant. Rival chipmakers have alleged the company has abused its market dominance to corner the market and coerce its customers into continuing to purchase its products.