Nvidia’s profits exceed expectations driven by demand for artificial intelligence chips economy

The American chip giant Nvidia announced yesterday evening, Wednesday, better-than-expected results for the third quarter of its fiscal year, stressing that demand for its products “continues to accelerate.”

Net profit in the third quarter, which ended in late October, rose by 65% ​​year-on-year to $31.9 billion, according to the company, a number that was welcomed on Wall Street, where Nvidia shares rose by about 3% in after-hours trading.

Third-quarter revenues increased by 62%, their first acceleration in 7 quarters. Sales of the data center segment, which represents the majority of Nvidia’s revenue, grew to $51.2 billion in the quarter ended October 26, and analysts had expected sales of $48.62 billion.

The company’s shares rose 4.68% to $195.21 in pre-opening trading on Thursday.

Blackwell Sales

“Blackwell’s sales exceeded expectations, and its cloud GPUs were completely sold out,” CEO Jensen Huang said in a performance statement, referring to the latest model of its cutting-edge chips used in artificial intelligence.

“The AI ​​ecosystem is expanding rapidly, with more new foundation model makers emerging, and more AI startups in more sectors and in more countries,” Huang added.

Fourth-quarter sales are expected to be $65 billion, plus or minus 2%, higher than analyst estimates of $61.66 billion, according to data from the London Stock Exchange Group.

The company’s business became more focused, with 4 customers accounting for 61% of sales in the third quarter, an increase from 56% in the second quarter.

Huang says he does not see an AI bubble, given the growing demand for Nvidia chips, adding: “From our point of view, we see something completely different.” But some analysts believe the results will not allay bubble fears, citing concerns that the growth of spending on AI infrastructure is unsustainable, and circular financing in the sector.

Nvidia entered into contracts worth $26 billion to re-lease its chips from cloud service customers who could not rent them otherwise, more than double what it was in the previous quarter.