Nvidia shares surge as AI chip demand accelerates revenues

Nvidia has reported robust third quarter results, surpassing market expectations as demand for its advanced artificial intelligence chips propelled both revenue and profit to record levels. The technology group at the centre of the AI revolution registered quarterly revenue of 57 billion dollars, an increase of 62 per cent compared with the same period last year. This figure outpaced the forecast by analysts, who predicted sales of 54.9 billion dollars. Net profit rose to 31.9 billion dollars, reflecting a 65 per cent year on year growth and exceeding the consensus estimate of 30.7 billion dollars.

For the current quarter, the company projects revenue of 65 billion dollars, plus or minus 2 per cent. This is significantly above analysts’ expectations of 62 billion dollars. Nvidia shares responded positively in after hours trading, gaining 4.2 per cent to reach 194.35 dollars and valuing the company at 4.6 trillion dollars. Over the last twelve months, Nvidia’s stock price has increased by 27 per cent.

Chief executive and co founder Jensen Huang described demand for Nvidia’s Blackwell chips as extraordinarily strong, noting that appetite for computing power continues to intensify. Despite concerns growing amongst investors regarding a potential bubble in artificial intelligence, Huang stated that Nvidia perceives the landscape very differently, signalling his confidence in the sustainability of ongoing growth in AI-related sectors.

Nvidia was established in California in 1993 and has emerged as the world’s most valuable publicly traded semiconductor company. Sustained enthusiasm for generative artificial intelligence has played a crucial role in driving demand for its chips, enabling the company to reach a valuation exceeding 5 trillion dollars by the close of October. Major customers such as Microsoft, Amazon, Alphabet, and Meta intend to increase investment in AI infrastructure over the coming year, further reinforcing Nvidia’s current market position.

Despite this momentum, some investors harbour reservations over the scale and profitability of Silicon Valley’s investment in artificial intelligence. The vast sums dedicated to developing new infrastructure have led to anxiety that actual revenues and profits may not fully justify the current pace of spending. There are also industry concerns regarding interconnected financial deals among major players, which could temporarily inflate company revenues.

Nvidia’s recent multibillion dollar agreements, including those with OpenAI, tech groups, and data centre partners, underscore the interconnectedness of leading AI firms. Anthropic, another major player, committed this week to purchasing 30 billion dollars of computing capacity from Microsoft’s Azure platform. In addition, Microsoft and Nvidia are jointly planning to invest up to 15 billion dollars in Anthropic, cementing their influence over the AI infrastructure market.

Investor surveys reflect significant caution. The majority of fund managers described the ongoing rally in US technology shares as the market’s most concentrated trade, while nearly half viewed an artificial intelligence bubble as the principal risk. Over sixty per cent of respondents to Bank of America’s November fund manager survey considered equity markets to be overvalued. Corporate leaders, including Alphabet’s chief executive Sundar Pichai, have stated that there are irrational aspects to the AI investment surge, echoing persistent concerns about sustainability and risk in the sector.