‘Off the charts’ demand for AI chips powers strong third quarter for Nvidia, calming worries of AI bubble

Nvidia CEO Jensen Huang recently announced a surge in demand for the company’s advanced computer chips, labeling it as “off the charts.” This news comes as Nvidia reported strong third-quarter results, reassuring investors concerned about a potential AI bubble.

The tech giant also provided optimistic guidance for the fourth quarter, anticipating sales of $65 billion, surpassing Wall Street’s prediction of $61.66 billion, as per LSEG data.

The results have brought stability to the markets, which were experiencing volatility due to worries about overvaluation of tech stocks and excessive spending by AI companies with minimal revenue to show for it.

In a statement, Huang mentioned that “Blackwell sales are off the charts, and cloud GPUs are sold out,” referring to Nvidia’s most advanced chips. He highlighted the rapid expansion of the AI ecosystem across various industries and countries, indicating a widespread adoption of AI technology.

Following the strong results, Nvidia witnessed a 4% surge in after-hours trading, showcasing investors’ confidence in the company’s performance. Nvidia plays a crucial role in the tech industry, with major players like OpenAI, Amazon, Microsoft, Google, and Meta relying on its chips to power their data centers and AI models.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, emphasized the significance of Nvidia’s earnings as a key event in the AI sector’s development, given its pivotal role in the artificial intelligence build-out.

In the third quarter, Nvidia surpassed analyst estimates by posting earnings of $1.30 per share, with overall revenue reaching $57.01 billion, reflecting a 22% increase from the same quarter last year. The company’s data center unit, a significant revenue contributor, reported sales of $51.2 billion for the quarter.

Looking ahead, Nvidia expects an adjusted gross margin of 75% in the current quarter, slightly above the anticipated 74.5%. In a recent statement, Huang revealed that Nvidia has secured $500 billion in chip deals through 2026.

Despite concerns about Nvidia’s outlook following stake sales by Softbank and Peter Thiel, Wedbush analyst Dan Ives expressed optimism, stating that Nvidia’s results could reignite the bullish tech trade as the year concludes.

Ives dismissed fears of an AI bubble, asserting that this is another milestone in the AI revolution, positioning us in the early stages of the AI game.