Nvidia’s Upbeat Forecast Soothes Fears of AI Spending Bubble

Nvidia Corp. delivered an upbeat revenue outlook that surpassed Wall Street expectations and pushed back firmly against concerns that the boom in artificial intelligence spending is forming a bubble. The stronger forecast helped ease the anxiety that has been rippling through the broader technology sector in recent weeks.

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The company projected sales of roughly $65 billion for the January quarter, according to a statement released Wednesday. Analysts had been looking for closer to $62 billion, based on compiled estimates, making the update an encouraging surprise for investors.

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The guidance suggests that demand for Nvidia’s high-end AI accelerators the powerful and costly chips that lie at the heart of modern AI development remains exceptionally strong. Those processors have driven an unprecedented wave of corporate spending, raising the question of whether the pace is sustainable. For now, Nvidia insists the momentum is real.

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“Lately there’s been plenty of noise about an AI bubble,” Chief Executive Officer Jensen Huang told analysts on a conference call. “From where we stand, the reality looks very different.”

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Shares of Nvidia rose roughly 4% in late trading after the results were announced. The stock had already gained 39% this year heading into the report, and the latest numbers provided another boost.

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Because Nvidia plays such a central role in the AI ecosystem, its earnings have effectively become a gauge of the industry’s health. The upbeat forecast lifted a range of related companies. CoreWeave Inc., a major supplier of AI computing infrastructure, surged more than 10% in after-hours trading, while Nebius Group NV climbed more than 8%.

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“Markets are reacting well to confirmation that AI demand hasn’t cooled,” said Brian Mulberry, senior client portfolio manager at Zacks Investment Management, which owns Nvidia shares. “Demand for Nvidia’s hardware solutions continues to look exceptionally strong.”

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To emphasize the breadth of AI’s ongoing expansion, Huang riffed on a popular movie title, saying that “AI is going everywhere, doing everything, all at once.”

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Last month, the CEO said the company has visibility into more than $500 billion in revenue over the next few quarters, driven largely by massive investments in AI infrastructure. According to Huang, large data-center operators are continuing to pour money into new gear because their early AI investments are now yielding real returns.

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On Wednesday, Chief Financial Officer Colette Kress added that the company sees an opportunity to exceed that already enormous revenue target.

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For the fiscal third quarter, Nvidia reported 62% revenue growth, bringing sales to $57 billion. Profit came in at $1.30 per share, topping analysts’ expectations for $1.26. Wall Street had been forecasting revenue of $55.2 billion for the quarter, which ended Oct. 26, making the beat especially noteworthy given the scale of Nvidia’s recent growth.

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The company’s core data-center division now the main engine of Nvidia’s business generated $51.2 billion in revenue, well ahead of the average estimate of $49.3 billion. Meanwhile, gaming chips, once Nvidia’s flagship product line, delivered $4.3 billion in sales, roughly in line with forecasts.

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Nvidia’s latest outlook underscores an almost unprecedented growth trajectory. If the company hits its January-quarter target, revenue will have risen nearly tenfold compared with the same period just three years ago. Nvidia is also on track to generate more annual net income than Intel Corp. and Advanced Micro Devices Inc. both longtime rivals will report in total annual revenue.

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Still, Nvidia’s rapid expansion hasn’t been without hurdles. US export restrictions on advanced chips to China have severely limited Nvidia’s access to one of its historically most important markets. Huang has argued publicly that these limits undermine the very national-security objectives they aim to protect. Even with some of the harshest restrictions easing, Nvidia still expects no revenue this quarter from AI accelerators shipped to China.

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Investors have also raised questions about the structure of Nvidia’s large, complex deals with key customers. Many agreements involve joint investments in AI startups such as OpenAI and Anthropic PBC, prompting concerns that some of the demand for computing power might be artificially inflated by these financial arrangements.

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Just earlier this week, Nvidia and Microsoft Corp. announced a plan to jointly invest up to $15 billion in Anthropic. The startup, in turn, has committed to purchase $30 billion in cloud-computing capacity from Microsoft’s Azure platform and will work closely with Nvidia on refining AI chips and models.

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Meanwhile, Nvidia’s competitors are becoming more vocal about their ability to challenge the company’s dominance. Advanced Micro Devices Inc. recently projected accelerating growth for its own AI-chip business and highlighted the potential of upcoming products. Broadcom Inc., Qualcomm Inc., and AMD have all announced partnerships with major data-center operators that currently rely heavily on Nvidia technology. Many operators are also exploring in-house chip designs to reduce their dependence on Nvidia’s supply chain.

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Even so, Huang is pushing aggressively to broaden AI adoption across more industries and geographies. He has spent much of the year traveling to meet with government leaders and corporate executives, encouraging them to expand their AI capabilities.

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Founded in 1993, Nvidia originally built its reputation by creating graphics chips that powered realistic visuals in computer games a market where AMD remains its only major competitor. Nvidia later adapted that same architecture to handle massive amounts of data processing, giving rise to its current leadership position in AI.

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Today, the company commands more than 90% of the AI-accelerator market, supplemented by a growing portfolio of networking gear, software platforms, and related services designed to reinforce its competitive edge.

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