Nvidia tops forecasts but flags Blackwell supply constraints

Nvidia Corp announced that the "age of AI is in full steam," as the company posted record-breaking third-quarter results with nearly doubled revenue.

Nvidia tops forecasts but flags Blackwell supply constraints

Based in Santa Clara, California, Nvidia produces the chips that power resource-intensive generative AI systems. For the quarter ending October 27, net income surged to $19.31 billion, up from $9.24 billion in the same period last year. Non-GAAP diluted earnings per share (EPS) rose to $0.81 from $0.40, while revenue soared 94% to $35.08 billion, compared to $18.12 billion a year earlier. Non-GAAP operating margins held steady at 75.0%. These results exceeded analysts’ projections, which had anticipated revenue of $32.95 billion, non-GAAP EPS of $0.74, and a non-GAAP gross margin of 74.9%.

AI age is in full steam

"The age of AI is in full steam, driving a global transition to Nvidia computing," said CEO Jensen Huang. He noted robust demand for Nvidia's current Hopper platform and the forthcoming Blackwell generation, emphasizing its potential to support foundation model pretraining, post-training, and inference at scale. Nvidia is now transitioning from its Hopper portfolio to the more advanced and powerful Blackwell products. In the third quarter, Nvidia's Data Center revenue reached a record $30.8 billion, marking a 17% sequential increase and a 112% year-over-year growth. Gaming revenue also climbed to $3.3 billion, up 14% from the prior quarter and 15% year-over-year.

CFO's comment and outlook

Chief Financial Officer Colette Kress attributed the strong performance to heightened demand for the Hopper platform, particularly in applications like training large language models, recommendation engines, and generative AI. She added that Blackwell production shipments are set to commence in the fourth quarter of fiscal 2025, with scaling expected to continue into fiscal 2026. However, both Hopper and Blackwell systems face supply constraints, and demand for Blackwell is projected to surpass supply for several quarters in fiscal 2026. For the fourth quarter, Nvidia anticipates revenue of $37.5 billion, plus or minus 2%, slightly higher than consensus expectations of $37.1 billion. GAAP and non-GAAP gross margins are forecasted at 73.0% and 73.5%, respectively, within a margin of 50 basis points.