Nvidia Q3 earnings surpass expectations as AI demand drives record revenue

Nvidia reported third-quarter earnings that exceeded Wall Street expectations, highlighting robust demand for its artificial intelligence (AI) chips and associated technologies.

For the quarter ending October 27, Nvidia achieved revenue of $35.08 billion, surpassing analysts’ forecasts of $33.16 billion, according to LSEG.

Adjusted earnings per share came in at 81 cents, above the expected 75 cents.

The tech giant also delivered a strong outlook for the fourth quarter, forecasting $37.5 billion in sales, surpassing analyst predictions of $37.08 billion.

This represents a 70% year-over-year increase in quarterly revenue.

Despite these stellar results, Nvidia shares dipped by 2% in after-hours trading.

Record-breaking growth in data center revenue

Nvidia’s data center division, the backbone of its AI chip sales, continues to dominate its revenue streams.

The division recorded $30.8 billion in revenue, outpacing analysts’ estimates of $28.82 billion.

This growth has been driven by the popularity of Nvidia’s AI processors, including its next-generation Blackwell chips.

Approximately $3.1 billion of the data center revenue came from networking equipment sales, underscoring Nvidia’s comprehensive approach to AI infrastructure.

Net income for the quarter surged to $19.3 billion, or 78 cents per share, compared to $9.24 billion, or 67 cents per share, in the same period last year.

Gross margins improved to 73.5%, attributed to higher sales of high-margin data center products.

Gaming and other segments contribute to growth

Nvidia’s gaming segment posted $3.28 billion in revenue, exceeding StreetAccount’s estimate of $3.03 billion.

This growth was driven by increased demand for GPUs in PCs, laptops, and gaming consoles, including chips used in the Nintendo Switch.

The company’s smaller divisions also showed strong performance.

Automotive sales rose by 72% year-over-year to $449 million, while the professional visualization segment saw a 17% increase, reaching $486 million in revenue.

Future outlook: Blackwell chips and AI dominance

Nvidia is gearing up to ship its next-generation Blackwell AI chips, expected to bolster its market position in 2024.

CFO Colette Kress acknowledged supply constraints for both Blackwell and the current-generation H200 chips, adding that demand is projected to exceed supply for several quarters in fiscal 2026.

As AI adoption accelerates across industries, Nvidia’s ability to meet surging demand for its chips remains a key focus.

End-customers like Microsoft, Oracle, and OpenAI have already begun integrating Nvidia’s cutting-edge hardware into their operations.