Nvidia Signals Strong AI Momentum With Upbeat Fourth-Quarter Forecast Despite Market Jitters ":

Nvidia, now the world’s most valuable company, has once again reassured Wall Street that the boom in artificial intelligence infrastructure is far from slowing down. The chipmaker issued an unexpectedly strong revenue forecast for its fourth quarter, projecting sales of $65 billion, plus or minus 2 percent—well above analysts’ average expectation of $61.66 billion, according to LSEG. The upbeat forecast comes at a crucial moment for global markets. Investors have poured billions into building next-generation AI data centers, betting heavily on Nvidia’s dominance in high-performance AI chips. But with concerns of an “AI bubble” gaining traction, many were looking to Nvidia’s results for signs of whether the massive investment wave was justified. CEO Jensen Huang, in his typically optimistic tone, framed the results as evidence of AI’s unstoppable rise. “The AI ecosystem is scaling fast with more new foundation model makers, more AI start-ups across more industries and in more countries. AI is going everywhere, doing everything, all at once,” he said. Still, the road this quarter has not been free of turbulence. Ahead of the earnings release, Nvidia shares slipped nearly 8 percent in November, a rare dip following a stunning 1,200 percent surge over the last three years. The pullback reflected growing doubts about whether the world’s largest cloud providers—Nvidia’s biggest customers—could keep up the pace of building data centers fast enough to absorb all the chips they were ordering. Those doubts were partially put to rest when Nvidia’s data-center division, the core of its business, reported revenue of $51.2 billion for the quarter ending October 26. That figure easily topped Wall Street expectations of $48.62 billion, highlighting relentless demand for the company’s flagship AI GPUs. Yet, some analysts caution that Nvidia’s growth could soon run into structural bottlenecks that even the company cannot control. Jacob Bourne, analyst at eMarketer, noted that while demand for GPUs remains massive, the real challenge may be physical constraints. “The question is whether physical bottlenecks in power, land, and grid access will cap how quickly this demand translates into revenue growth through 2026 and beyond,” he said. There is also rising concern about customer concentration. In Nvidia’s fiscal third quarter, just four customers accounted for 61 percent of total sales, reflecting growing reliance on a small set of hyperscalers like Microsoft, Amazon, Google, and Meta. At the same time, Nvidia dramatically increased the amount it spends renting its own chips back from cloud providers—reaching $26 billion, more than double the $12.6 billion from the previous quarter. These arrangements allow Nvidia to access chips that cloud partners are not fully utilizing, but they also highlight how tight the global supply of AI hardware remains. Despite these risks, analysts and investors maintain confidence in Nvidia’s long-term trajectory. Demand for its AI systems—which surged following the launch of ChatGPT in late 2022—shows no sign of fatigue. Huang recently revealed that Nvidia has already secured $500 billion in chip bookings through 2026, underscoring the scale of planned AI build-outs. Big Tech continues to fuel that momentum. Microsoft, one of Nvidia’s largest customers, recently reported record quarterly capital spending of nearly $35 billion, with roughly half directed toward acquiring advanced AI chips and expanding data-center capacity. Looking ahead, Nvidia expects an adjusted gross margin of 75 percent, plus or minus 50 basis points, slightly above market expectations of 74.5 percent—another sign of its strong pricing power. For now, Nvidia’s message to Wall Street is clear: the AI boom is still gaining speed, and the company has no intention of slowing down.

TECHNOLOGY