Nvidia's strong revenue forecast of $65 billion has temporarily soothed investor (Image: Seeking Alpha)
Nvidia, the undisputed bellwether of the artificial intelligence market, delivered a powerful message to worried investors: the AI boom is far from over. The company forecast quarterly revenue dramatically above Wall Street estimates, causing its shares to surge and temporarily calming fears that the massive investment in AI has created a speculative bubble.
The chip designer's financial performance was staggering. It expects fiscal fourth-quarter sales of $65 billion, significantly surpassing the average analyst estimate of $61.66 billion. This upbeat outlook comes after a third quarter in which revenue jumped 62%, the company’s first growth acceleration in seven quarters. The main boost came from its data-center division, home to its top AI chips, where sales surged to $51.2 billion.This blockbuster report sent Nvidia's stock up 5% after hours, poised to add a colossal $220 billion to its market value.
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Nvidia's CEO directly addressed the "AI bubble" talk that has been circulating among investors. In a statement, he declared, "The AI ecosystem is scaling fast," pointing to "more new foundation model makers, more AI startups, across more industries, and in more countries." Huang's confident summary was that "AI is going everywhere, doing everything, all at once." On a call with analysts, he stated that from his company's vantage point, they see a reality far removed from a bursting bubble, citing "off-the-charts" sales for its Blackwell chips and sold-out cloud GPUs.
Even with the strong results, some analysts caution that worries about an AI bubble haven’t fully gone away. The main concern is whether cloud giants like Microsoft and Amazon can keep spending on AI infrastructure at the current extremely fast pace. One analyst noted, "The concern that AI infrastructure spending growth is not sustainable is not likely to ebb." There are also questions about whether these tech giants are using accounting methods to artificially boost their earnings from this massive investment.
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Looking ahead, Nvidia must deal with several challenges it cannot fully control. One major problem is the “physical bottlenecks” in power supply, land, and grid access, which could slow how quickly cloud companies can build new data centers for Nvidia’s chips. Another concern is that Nvidia’s sales are becoming more concentrated—four customers now make up 61% of its revenue, creating a risk if any of them cut back on spending.
