Nvidia forecasts Q4 revenue above estimates despite AI bubble concerns

Nvidia has predicted revenue for the fourth quarter that is higher than Wall Street had predicted, and it is betting on a burgeoning demand for its AI chips from cloud providers as the public’s concerns about a growing artificial intelligence bubble are raised.

According to LSEG’s data, the world’s most valuable company anticipates fourth-quarter sales of $65 billion, plus or minus $ 2 percent, compared to analysts’ consensus of $ 61.6 billion.

The findings from the AI chip leader represent a turning point for Wall Street as global markets examine whether investing billions of dollars in expanding the AI infrastructure has produced towering valuations that might outpace fundamentals.

With more new foundation model makers and more AI start-ups spread across more sectors and nations, the AI ecosystem is rapidly expanding. Nvidia CEO Jensen Huang stated in a statement that AI is “going everywhere, doing everything, doing it all at once.”

After rising by 1,200% over the previous three years, doubts had caused Nvidia shares to drop by nearly 8% in November.

In the quarter that ended on October 26, sales in the data-center segment, which accounts for the majority of Nvidia’s revenue, increased to $ 57.2%. LSEG data indicated that analysts had anticipated sales of $48.62 billion.

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However, some analysts noted that Nvidia’s expansion could be hampered by factors beyond its control.

Investors are increasingly looking for answers to whether hyperscalers can actually use this capacity quickly enough, according to Jacob Bourne, an analyst with eMarketer. The key question is whether physical power, land, and grid access bottlenecks will limit the growth in revenue through 2026 and beyond due to physical bottlenecks.

In its third fiscal year, Nvidia’s business grew more concentrated, with four customers accounting for 61 percent of sales. With contracts totaling $ 26 billion, more than twice the $ 12.6 billion it received in the previous quarter, it sharply increased how much money it spends renting back its own chips from its cloud customers, who otherwise cannot rent them out.

Analysts and investors were generally anticipating a strong underlying demand for AI chips, which has supported Nvidia’s growth since ChatGPT’s launch in late 2022.

Jensen Huang, the CEO of Nvidia, stated last month that the company has booked $ 500 million worth of its advanced chips through 2026.

As it commits to multibillion-dollar, multigigawatt buildouts, Big Tech, one of Nvidia’s biggest customers, has doubled down on spending to expand AI data centers and snatch the most expensive chips.

For its fiscal first quarter&nbsp, Microsoft reported a record capital expenditure of nearly $35 billion, with roughly half of it being spent primarily on chips.