Nvidia, a global leader in the semiconductor industry, has reported its financial results for the third quarter of this year. The company recorded record revenues of $35.1 billion, marking a 94% year-on-year growth. The firm’s profits rose to $19.3 billion, exceeding analysts’ expectations by nearly $2 billion. These impressive results are largely driven by the boom in artificial intelligence technologies. However, despite these successes, the pace of revenue growth is starting to slow down, giving rise to mixed reactions in the market. In response to the publication of the results, the company’s shares fell by about 2% in after-market trading.
Nvidia’s third quarter results exceeded expectations. However, the market perceives a slowing in the pace of revenue growth over recent quarters. It is worth noting that most companies in the market would like to grow as fast as Nvidia has so far. At the end of the first quarter of this year, the company’s annual revenues grew at a staggering 208.2%, at the end of the second quarter – 194.74%, and in the third quarter, the dynamics dropped to 152.36%. Such a slowdown is the natural consequence of a high baseline – the higher the level of revenue achieved, the more challenging it becomes to maintain the previous pace. It’s also worth noting that the AI market is entering a new phase – stabilisation, which requires more significant investment inputs and innovative solutions.
The core source of Nvidia’s success remains the data centre sector, which generated revenues of $30.8 billion in the third quarter, a 112% year-on-year increase. The critical growth factor is the demand for Hopper-based chips and the development of next-generation AI infrastructure. Tech companies are investing billions of dollars in the development of data centres, which allows for the training and implementation of advanced AI models.
The future of this segment is linked to Blackwell processors, successors to the Hoppers, which are expected to be more efficient and energy-saving. However, emerging reports of overheating problems and potential production difficulties may impact the company’s future results. The company’s dependence on demand from other large tech companies remains a risk, although Nvidia appears to be reducing this dependence in subsequent quarters.
Since the beginning of the year, Nvidia’s shares have risen by 195%, and its market capitalisation has reached $3.61 trillion, making it one of the most valuable stock companies in the world. Nvidia also accounts for about 25% of this year’s gains for the S&P 500 index. The market’s initial response to the results was negative – shares fell in after-market trading by about 2%. It is evident that some investors are concerned that the company’s valuation may be too high relative to the potential pace of growth in subsequent quarters. Others felt that good results could be an opportunity to realise their own profits. Nvidia remains a leader in the industry, but maintaining a competitive edge and investor satisfaction will depend on innovation and the company’s ability to meet the growing market demands. Despite the decreasing growth dynamics, Nvidia’s future still seems full of opportunities, especially in terms of implementing new technologies and developing key segments such as AI, supercomputers, and the automotive sector.
Author: Paweł Majtkowski, eToro market analyst.
Source: https://ceo.com.pl/nvidia-imponujace-wyniki-i-rosnace-obawy-inwestorow-35231
