After closing on Wednesday, November 20th Eastern Time, Nvidia announced its third quarter results for the fiscal year 2025 ending on October 27, 2024. The company's quarterly sales revenue reached a record high of 35.1 billion US dollars, a month on month increase of 17% and a year-on-year increase of 94%. This is the first time since the first quarter of the 2024 fiscal year that Nvidia's quarterly year-on-year growth rate has not doubled, and the month on month growth rate has also slowed down.
Meanwhile, Nvidia's performance guidance shows that revenue will further slow down in the next quarter. Based on a median guidance of $37.5 billion, Nvidia expects fourth quarter revenue to increase by approximately 70% year-on-year. While this is higher than the consensus analyst estimate of $37.1 billion, it is lower than the buyer's expectation of $38.8 billion, with some analysts even expecting it to be as high as $41 billion.
After the release of the financial report, Nvidia's stock price, which had fallen nearly 0.8%, experienced a widening decline after the market closed, dropping about 5% at one point before narrowing most of the losses later. Subsequently, the CEO of Nvidia and a group of executives attended the earnings conference call to "appease" investors.
Regarding the Blackwell architecture chip that the market is most concerned about, Huang Renxun stated that the design flaws of the Blackwell chip have been completely resolved and it has now been "fully put into production". He also emphasized that the expected demand for this highly anticipated high-performance chip product will far exceed expectations for several consecutive quarters.
Daniel Ives, Managing Director and Senior Stock Analyst of Wedbush, stated in a comment email sent to Daily Economic News reporters after Nvidia's financial report was released, "Blackwell represents the next frontier of Nvidia and the entire AI revolution, and we believe the market still underestimates the demand curve for the next 12 to 18 months or even longer. During last month's earnings season, cloud data and AI data center spending from Microsoft, Amazon, and Google performed strongly, indicating that large-scale enterprise AI demand is underway
Dave Mazza, CEO of Roundhill Investments, also expressed similar views to every journalist. He believes that Mazza said, "Unless there are unexpected structural issues, Nvidia can become a core stake in any technology focused investment portfolio
However, Morgan Stanley analysts have warned that supply chain constraints may affect short-term expectations for Nvidia's stock price.
Huang Renxun: The design flaws have been completely resolved, and Blackwell has been fully put into production
Recently, foreign media reported that Nvidia's next-generation Blackwell processors are facing overheating challenges when installed in high-capacity server racks, which has raised concerns among customers such as Google.
On the evening of November 18th (Monday) Beijing time, a spokesperson for Nvidia responded to a comment email from the Daily Economic News, saying, "The Nvidia GB200 (the first chip based on the Blackwell architecture) is the most advanced computer chip ever, and integrating them into various data center environments requires joint design with our customers. Our customers are competing to deploy them, and we are working with leading cloud service providers as an important part of our engineering team and processes. Engineering iterations are normal and expected
During the conference call after the release of the financial report, Nvidia CEO Huang Renxun stated that the design flaws of the new product series Blackwell architecture AI GPU have been completely resolved and are now "fully operational". He also emphasized that the expected demand for this highly anticipated high-performance AI GPU product will far exceed expectations for several consecutive quarters. Nvidia executives expect Blackwell to ship this quarter and accelerate its supply pace in the coming year.
According to Huang Renxun, there are two major trends driving the global popularity of NVIDIA chips: firstly, the entire computing field is shifting from CPU supported programming to GPU supported machine learning; Secondly, the development of new industries in the field of AI. He stated that as basic model manufacturers expand the deployment scale of AI pre training, post training, and cloud based AI inference computing power, the demand for Hopper chips and expectations for Blackwell chips are "incredible".
CFO Kress stated that 13000 Blackwell chip samples have been sent to customers. Every customer is competing to be the first to enter the market. Blackwell is now in the hands of all our major partners, who are working hard to establish data centers She expects Blackwell chip shipments to increase next year and is expected to generate "billions of dollars" in revenue for the company in the fourth quarter of fiscal year 2025.
In addition, when asked whether the tariffs that the Trump administration may impose will affect Nvidia, Huang Renxun responded, "No matter what decision the new administration makes, we will certainly support it. The company will fully comply with any regulations that come with it
Analyst: Blackwell represents the next frontier of Nvidia and the AI revolution
Daniel Ives, Managing Director and Senior Stock Analyst of Wedbush, stated in a comment email to the Daily Economic News that "Blackwell represents the next frontier of Nvidia and the entire AI revolution, and we believe Wall Street still underestimates the demand curve for the next 12 to 18 months or even longer. The financial report released last month showed strong spending on cloud data and AI data centers from Microsoft, Amazon, and Google, indicating that large-scale enterprise AI demand is underway. Chip demand from smaller companies such as ServiceNow and Palantir also confirms this
Other industry insiders are also optimistic about the prospects of Nvidia Blackwell chips.
Industry analysts predict that Nvidia's revenue for fiscal year 2025 will reach $126.16 billion, more than doubling from $60.9 billion in fiscal year 2024. The revenue for fiscal year 2026 is expected to increase by another 45.6%, reaching $183.67 billion. The strong demand for Blackwell in the market may help it significantly exceed this target.
In addition to Blackwell chips, other chips under Nvidia, such as the Hopper series, also have strong market appeal.
Analysts predict that the Hopper series of artificial intelligence chips will generate over $42 billion in revenue for Nvidia next year. In order to meet the surge in demand, every cloud computing customer needs to deploy as much artificial intelligence computing power as possible (Hopper and/or Blackwell), "said Vivek Arya, an analyst at Bank of America Securities, in a report on Monday
Citigroup stated that Nvidia's data center sales are expected to increase by approximately $3 billion to $4 billion in the first quarter of next year, with a projected gross profit margin of 73%, which is about 0.3 percentage points lower than market expectations; But starting from the second quarter, as Blackwell's adoption rate increases, Nvidia's chip gross profit margin will improve and achieve more "beyond expectations" performance.
Citigroup has also raised its EPS expectations for Nvidia for the fiscal years 2025, 2026, and 2027, and raised its target stock price from $150 to $170.
How will Nvidia's stock price go next? Intense clash of long and short viewpoints
After the release of the financial report, Nvidia's stock price, which had fallen nearly 0.8%, experienced a widening decline after the market closed, dropping about 5% at one point before narrowing most of the losses later. Since 2024, driven by the AI wave, Nvidia's stock price has skyrocketed by over 200%, making it the world's most valuable company. By 2023, Nvidia's stock price has skyrocketed by over 240%.
Industry insiders still show great confidence in Nvidia's future trend.
Dave Mazza, CEO of investment management firm Roundhill Investments, recently stated in an interview with journalists that even if Blackwell chips are recently exposed for design flaws, it will not have a significant impact on Nvidia's long-term development trajectory, as Nvidia has a good track record in addressing technological challenges and providing industry-leading products. Moreover, the demand for Nvidia GPUs in the AI and data center markets remains strong.
Nvidia is currently one of the main holdings in the seven major US stock ETFs (MAG7) under Roundhill Investments, accounting for 16.29% of the entire investment portfolio, second only to Tesla's 17.83%.
Mazza said, "Unless there are unexpected structural issues, Nvidia can become the core holding of any technology focused investment portfolio. Although specific trading decisions may depend on the details of the earnings report, we have great confidence in Nvidia
At the same time, some investment banks have expressed relatively cautious views.
Morgan Stanley analysts have warned that supply chain constraints may affect short-term expectations for Nvidia's stock price. Morgan Asset Management analysts said that although Nvidia currently has a clear lead, it will face challenges from a group of competitors in the future. Multiple semiconductor companies and cloud service providers are intensifying their efforts to seize market share from Nvidia.
In addition, the regulatory risks faced by Nvidia should not be underestimated. Bloomberg revealed in early September this year that the US Department of Justice has issued a subpoena to Nvidia due to suspicion of market monopoly, and investigators have been contacting other technology companies to collect information related to Nvidia's alleged monopoly. However, Nvidia has denied the rumors to the media, stating that it has not received a subpoena from the US Department of Justice.
At the beginning of this month, the US Supreme Court conducted an analysis of an old case involving Nvidia's securities fraud. In 2018, Huang Renxun claimed that Nvidia's performance was continuously affected by cryptocurrency mining, but was later accused of exaggerating and leading to Nvidia being sued for securities fraud. The study by the US Supreme Court earlier this month did not reach a conclusion, nor did it support Nvidia's request to withdraw the lawsuit.
For every $1 spent by technology companies on Nvidia GPU chips, profits increase by $8-10
With the release of Nvidia's financial report, the market is also paying attention to its impact on the technology sector and even the entire US stock market.
Mazze stated that Nvidia's revenue is a barometer for the technology industry, especially in the AI field. A strong report combined with optimistic guidance may reignite investors' enthusiasm for technology stocks, potentially driving the overall rise of the industry. On the contrary, if Nvidia performs poorly or has conservative guidance, it may lead to a temporary correction in high growth technology stocks.
Bank of America analysts stated in a report on Sunday that Nvidia's third quarter report may guide the short-term trajectory of the US stock market. The bank's analysts, led by Gonzalo Asis and others, emphasized Nvidia's important position in the S&P 500 index in the report, stating that it "contributed about 20% of the S&P 500 index's returns in the past year. With the market rebounding after last week's US election, we believe Nvidia's third quarter report can determine the short-term trend of the US stock market
Although broader market factors such as election results, interest rate fluctuations, and the Federal Reserve's policy path dominate the current market narrative, option data highlights that Nvidia's profits may play a more critical role. A strategist at Bank of America Securities stated that when Nvidia's financial report was released, the implied volatility of the S&P 500 index was consistent with Nvidia's own implied volatility.
Bank of America analysts explained that the risk ratio allocated by the options market to Nvidia's earnings day is greater than other major economic events, including the next non farm payroll report, inflation data, and even the Federal Reserve's FOMC interest rate meeting in December.
Ives told reporters, "The technology sector will still be in a super spending cycle, which paves the way for technology stocks to continue rising until the end of the year and 2025. We still expect that for every $1 spent by other technology companies on Nvidia GPU chips, the profits of the entire US technology stock market will increase by $8-10. We remain firmly bullish on technology stocks in 2025
Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Please verify before use. Based on this operation, the risk is borne by oneself.