Nvidia soars beyond expectations: earnings ignite the markets and quell fears of an AI bubble

Expectations for Nvidia were sky-high: analysts projected EPS of $1.26 and revenue of $55.2 billion, figures reflecting the company’s role as a barometer of global markets. Any sign of slowdown could have fueled renewed fears of an AI bubble, especially after Jensen Huang outlined a target of $500 billion in revenue by 2026. It was in this climate of intense pressure that Nvidia released its results, once again surprising investors.

The tech giant led by Huang is once again setting the pace for the entire technology sector with a revenue forecast that has exceeded even Wall Street’s most optimistic expectations. Nvidia expects sales of about $65 billion for the quarter ending in January, three billion above analysts’ estimates—a sign that the AI boom is not just continuing, but accelerating.

During the conference call with analysts, Huang directly addressed the concerns that had begun circulating in recent weeks. “There has been a lot of talk about an AI bubble. From our point of view, we see something very different,” the CEO said, emphasizing the solid and expanding demand for AI accelerators, the chips that power the development of the most advanced models.

Huang’s words immediately echoed in the market: in after-hours trading, the stock rose about 5%, extending an already impressive 39% gain since the start of the year. Its market capitalization now exceeds $4.5 trillion, confirming Nvidia as the most valuable company in the world.

The most surprising part of the results concerns the performance of the third fiscal quarter, which closed on October 26. Nvidia reported revenue of $57 billion, up 62% from the previous year and well above the $55.2 billion estimate. Earnings, at $1.30 per share, also beat expectations ($1.26). The true engine of the surge remains the data center division—the beating heart of the AI ecosystem—with $51.2 billion in revenue, compared to the expected $49.3 billion. The gaming segment was less central but steady, generating $4.3 billion, in line with forecasts.

If confirmed, next quarter’s sales will be ten times higher than those of the same period three years ago—growth almost unprecedented in the history of high tech. And Nvidia is on track to close the year with net profit exceeding the combined revenue of Intel and AMD. Adding to the market’s enthusiasm were comments from CFO Colette Kress, who said the target of $500 billion in future revenue “coming soon” might not only be reached but surpassed: “The number will grow,” she stated.

Nvidia continues to forge strategic alliances with industry giants. The agreement with Microsoft and the joint investment of up to $15 billion in Anthropic show that demand for computing power is being driven not just by hype but by new real-world applications already delivering results.

Challenges remain, however. U.S. export restrictions to China have wiped out sales of AI accelerators in a market with enormous potential. “Our forecast for China is zero,” Huang noted, expressing hope for a change in U.S. policy. On the competitive front, AMD, Broadcom, and Qualcomm are trying to challenge Nvidia’s dominance, while some cloud providers are experimenting with their own internally developed chips. But the CEO sees the pressure as limited: many customers who tried alternatives are returning to Nvidia’s platform, pushed by the growing complexity of AI systems.

Andrea Pelucchi