Nvidia forecasts stonger than expected fourth-quarter revenue

Nvidia forecast fourth-quarter revenue above Wall Street estimates on Wednesday, betting on booming demand for its AI chips from cloud providers against the backdrop of widespread concerns of an artificial intelligence bubble.

The results from the AI chip leader mark a defining moment for Wall Street, as global markets looked to the chip designer to determine if investing billions of dollars in AI infrastructure expansion had resulted in towering valuations that potentially outpaced fundamentals.

The world’s most valuable company expects fiscal fourth-quarter sales of $65 billion, plus or minus 2%, compared with analysts’ average estimate of $61.66 billion, according to data compiled by LSEG.

Shares of the AI market bellwether rose over 4% in extended trading. Ahead of the results, doubts had pushed Nvidia shares down nearly 8% in November, after a 1,200% surge in the past three years. The broader market has declined almost 3% this month.

Still, analysts and investors widely expected the underlying demand for AI chips, which has powered Nvidia results since ChatGPT’s launch in late 2022, to remain strong. 

Nvidia CEO Jensen Huang said last month the company has $500 billion in bookings for its advanced chips through 2026.

Big Tech, among Nvidia’s largest customers, has doubled down on spending to expand AI data centers and snatch the most advanced, pricey chips as it commits to multi-billion, multi-gigawatt build outs.

Microsoft reported a record capital expenditure of nearly $35 billion for its fiscal first quarter last month, with roughly half of it spent primarily on chips.  

Nvidia expects an adjusted gross margin of 75%, plus or minus 50 basis points in the fourth quarter, compared with the market expectation of 74.5%.

—Arsheeya Bajwa and Stephen Nellis, Reuters

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