Nvidia exceeded Wall Street expectations for its fiscal third-quarter earnings, though its guidance for the upcoming quarter fell short of high investor hopes amid strong AI demand.
Shares of NVIDIA Corporation (NASDAQ:NVDA) dropped by more than 2% in after-hours trading following the report.
The company reported Q3 earnings per share of $0.81 on $35.1 billion in revenue, beating analysts' forecast of $0.75 EPS and $33.09 billion in revenue.
Data center revenue was particularly strong, reaching $30.8 billion, up 17% from the previous quarter and up 112% from the same period last year. This was higher than the anticipated $28.84 billion.
Looking ahead to Q4, Nvidia projects revenue of $37.5 billion, plus or minus 2%, slightly above the $37.09 billion forecast. GAAP gross margins are expected to be 73.0%, with a margin of error of 50 basis points.
Bank of America analysts noted that while the stock may experience short-term fluctuations, they remain optimistic, highlighting Nvidia’s leadership in transforming legacy infrastructure into accelerated systems. They also pointed out that Nvidia continues to generate strong free cash flow.
Piper Sandler analysts also see strong growth prospects for Nvidia, despite the underwhelming Q4 guidance. They believe the company is well-positioned for growth starting in April, as it transitions to new products like the Blackwell AI chips.
Nvidia is facing some supply constraints for its Blackwell chips due to overwhelming demand, which the company expects to last into fiscal 2026.
In other news, Nvidia's AI chips, including Blackwell and Hopper systems, are expected to see strong demand, though supply limitations could restrict availability for the next several quarters.