Nvidia, the world’s largest publicly traded company by market capitalisation, reported its Q3 earnings after the market close on Wednesday. The company posted impressive growth, surpassing expectations for both sales and earnings while also offering better-than-expected guidance for the current quarter. However, some investors weren’t particularly happy with the report, leading to a dip in Nvidia stock following the announcement.
Earnings per share came in at $0.81, beating the expected $0.75. Revenue totaled $35.08 billion, exceeding analysts' projections of $33 billion. For the current quarter, Nvidia estimated revenue to reach $37.5 billion. So why did Nvidia stock fall?
The issue lies in the fact that while Nvidia outperformed average Wall Street estimates of $37.08 billion, it fell short of the most optimistic projections, which were as high as $41 billion. Some investors obviously wanted too much.
Over the past two years, Nvidia has seen an extraordinary surge in its stock price, fueled by the rise of AI since the launch of ChatGPT. The company’s performance has become a key indicator of the ongoing artificial intelligence boom.
A significant portion of Nvidia’s revenue comes from its data center business, which includes sales of components used to power AI technologies. This division reported $30.8 billion in revenue, surpassing the $28 billion analysts had expected.
Nvidia chips are used by over 40,000 companies, with major customers like Amazon, Apple, Tesla, Microsoft, and Meta. These tech giants rely on Nvidia chips to build AI data centers that support generative AI apps like ChatGPT.
Nvidia CEO Jensen Huang addressed the demand for the company’s new Blackwell chips, stating that production was ahead of expectations this quarter. “Blackwell production is in full steam,” Huang said, responding to earlier concerns about potential delays.
Investor worries heightened earlier this week after The Information reported that Blackwell chips were overheating in some data center racks. Nvidia explained that it was "normal and expected" for certain customers to adjust the configuration of their data center setups.
Nvidia’s Q4 guidance points to approximately 70% growth — a significant slowdown compared to the 265% annual growth reported in the same quarter last year. Even so, Nvidia shares have surged 200% this year, cementing its position as the world’s largest company with a market cap of $3.6 trillion.
