Nvidia earnings recap: CEO Jensen Huang says Blackwell demand is 'incredible' as AI gold rush continues 'full steam'

That's a wrap on the Q&A portion of the call.

Huang recaps the "new industrial revolution" the company says is underway amid the AI boom, and talks about Hopper and Blackwell demand.

The CEO mentions AI coworkers and the age of robotics as some of the transformations on the horizon.

The newest AI applications consume a huge amount of computing, Huang says, and that's good for Nvidia's business.

"There are more foundation model makers now than there were a year ago," Huang says. "The computing scale of pre-training and post-training continues to grow exponentially. There are more AI native startups than ever, and the number of successful inference services is rising."

Investments in industrial robotics are surging due to breakthroughs in physical AI, Huang adds.

"The age of robotics is coming," Huang says, and the AI age is already upon us.

"Thanks for joining us today," the CEO says in closing. "Catch up next time."

Asked about Trump's tariff plans and any impact on Nvidia's China business, Huang dodges a bit on talking specifics, saying the company is taking things "one quarter at a time."

"Whatever the new administration decides we will of course support the administration," Huang says.

Nvidia will comply "fully" with any regulation that comes along with Trump's return to the White House while also continuing to compete in the marketplace, he adds.

Kress says the ability to sell Nvidia's networking with many of its systems that the company is doing in its data centers continues to do "quite well."

"So this quarter is just a slight dip down, and we're going to be right back up in terms of growing," CFO Kress says.

"We're getting ready for Blackwell and more and more systems that will be using not only our existing networking, but also the networking that is going to be incorporated in a lot of these large systems that we are providing them to," she adds.

Google's Notebook LM, which started out as an experiment, allows users to drop in links, information, and files. It will generate a podcast hosted by two AI hosts, as well as study guides and briefing docs.

Huang says NotebookLM is one of his favorite applications.

"I use the living daylights out of it," Huang says, adding that he puts every PDF and archive into it. He says the goal is to train models so that people use it.

At the same time, companies are looking to build out their Blackwell systems, the CFO says.

It's possible for Hopper to grow from Q3 to Q4, Kress says, but "we'll see."

Blackwell will put pressure on profit margins next quarter, but Kress says it may recover as the ramp-up continues next year.

"I think it is a reasonable assumption or a goal for us to do, but we'll just have to see how that mix of ramp goes."

Asked if Nvidia's gross margins could we reach the mid-70s in the second half of next year, Kress says "Yes."

The first shift is moving from coding that runs on CPUs to machine learning that runs off GPUs.

"That fundamental shift from coding to machine learning is widespread," Huang says, adding that "there are no companies" that won't do machine learning.

The second shift is that the systems are creating AI, he says.

"When we say generative AI, we're essentially saying that these data centers are really AI factories," Huang adds.

The CEO says he expects the modernization of this new industry to go on for several years.

In discussing supply and demand, Huang says the company is at the beginning of a Gen AI revolution and the new generation of foundation models that can reason, such as OpenAI's o1 model.

Huang names physical AI as a "really exciting" area. He defined it as AI "that now understands the structure of the physical world."

Huang is asked a tough question that references past production challenges for Blackwell and a recent report about heating issue concerns. An analyst asks what he would say to investors who are concerned about Nvidia's ability to execute the roadmap Huang previously presented.

In his response, Huang reiterates that Blackwell production is in full steam. Nvidia will deliver more Blackwells this quarter than previously estimated, the CEO says, and demand exceeds supply as expected.

Our execution is "going well," he adds.

Huang says the engineering required to get each system online in customers' data centers is complicated. "We're very good at it, but still, there's still a lot of a lot of engineering that happens at this point."

Huang says Blackwell demand is "coming from a lot of different places."

In a question about whether demand for Blackwell is greater since clusters have yet to benefit from it, the CEO said demand is coming from various areas: Pre-training scaling, post-training scaling, and inference time scaling. Huang says Nvidia is especially seeing "inference demand go up"

CEO Jensen Huang fields the first question.

Fourth-quarter revenue is expected to decline sequentially. The CFO says the decline is due to supply constraints.

She adds that Nvidia is currently focusing on on "ramping to strong demand."

As Blackwell ramps up, Kress says margins are expected to be in the low 70's, and "when fully ramped," she expects margins in the mid-70's.

Accenture has trained 30,000 consultants on Nvidia's product stack.

Kress highlighted one case in which the steps required for a marketing campaign decreased 35% with AI. The CFO mentions Deloitte as well.

Combined the two have more than 1 million employees.

Kress says Nvidia data center revenue in China "grew significantly due to shipments of export-compliant Hopper products."

As Kress continues with her prepared remarks, Nvidia stock was trading down around half a percent in after-hours trading.

Nvidia had some early production issues that it had to work through. Nvidia's CFO says Blackwell is in "full production" after making changes.

Nvidia shipped 13,000 GPU samples to customers in the third quarter, including one of the first engineering samples.

She says demand for the chip "is staggering," and the company is "racing to scale supply" to meet the demand.

Kress also mentions data center revenue hitting a new quarterly record of $30.8 billion.

CEO Jensen Huang and CFO Colette Kress are on the call, which opens with some prepared remarks about the company's performance over the third quarter. The execs will then field questions from Wall Street analysts.

Emarketer technology analyst Jacob Bourne tells BI that Nvidia continues to show its dominance in AI chip demand, but "critical questions" remain around Blackwell's production and customer concentration.

Bourne says Nvidia's expansion into areas including digital twins and autonomous vehicles "shows promising diversification" but also strong dependance on certain customers.

"Despite Nvidia's technological leadership through CUDA and its first-mover advantage in AI infrastructure, there's little room for execution missteps in 2025," Bourne says. "Particularly given uncertainties around Blackwell's rollout and increasing competition from both AMD and key customers' in-house chip development efforts."

3rd quarter

• Revenue: $35.08 billion, +94% y/y, estimate $33.25 billion

  • Data center revenue: $30.8 billion vs. $14.51 billion y/y, estimate $29.14 billion
  • Gaming revenue: $3.3 billion, +15% y/y, estimate $3.06 billion
  • Professional Visualization revenue: $486 million, +17% y/y, estimate $477.7 million
  • Automotive revenue: $449 million, +72% y/y, estimate $364.5 million
• Adjusted gross margin: 75% vs. 75% y/y, estimate 75%
• Adjusted operating expenses: $3.05 billion, +50% y/y, estimate $2.99 billion
• Adjusted operating income: $23.28 billion vs. $11.56 billion y/y, estimate $21.9 billion
• Adjusted EPS: 81c, estimate 74c

4th quarter guidance

Revenue: $37.5 billion, plus/minus 2%, estimate $37.1B

Source: Bloomberg

Nvidia stock was down 2% heading into its third-quarter earnings report.

The intra-day decline was more than triple the Nasdaq's 0.6% decline, and far outpaced the S&P 500's 0.4% dip.

The options market implies an 8% swing in Nvidia stock in either direction after it reports its earnings results later today.

If realized, the swing would imply a $300 billion gain or loss in market value for the AI giant. Nvidia has a market valuation of about $3.53 trillion as of Wednesday afternoon.

Long-time Nvidia bull Dan Ives of Wedbush expects Nvidia to deliver the goods when it reports earnings on Wednesday.

"We expect another drop the mic performance from Nvidia tomorrow after the bell as right now Jensen & Co. are the only game in town with $1 trillion+ of AI Cap-Ex on the way for the next few years with Nvidia's GPUs the new oil and gold in this world," Ives said in a Tuesday note.

Ives said he expects Nvidia to beat both revenue and guidance estimates by $2 billion.

"Blackwell production and demand appear robust and we expect very bullish commentary from Jensen on the conference call which will be a focus of the Street that sends the bears back into their caves and hibernation mode," Ives said.

Ives added that he is encouraged by the "cloud numbers and AI data points" offered by cloud hyperscalers like Microsoft, Amazon, and Alphabet during their recent earnings calls.

Bloomberg Intelligence analyst Kunjan Sobhani said in a recent note that he expects Nvidia's profit margins to remain well above the 70% level, which is high for a hardware manufacturer.

"Gross margin is likely to decline as much as expected in 4Q yet remain comfortably above 73%," Sobhani said.

"Nvidia is likely to solidly exceed 3Q revenue consensus more than it did in the past two quarters and the company will likely raise 4Q guidance, driven by greater adoption of its Hopper family, even as hyperscaler customers await the Blackwell ramp-up in 2025," Bloomberg Intelligence analyst Kunjan Sobhani said in a recent note.

Sobhani highlighted that Blackwell delay concerns were likely solved in the third-quarter, setting up the expectation that shipments "to key customers" will begin in the fourth-quarter.

"Increased capex guidance from hyperscalers has further boosted confidence in near-term sales. We expect small volume shipments of Blackwell in fiscal 4Q, reaching full speed in 1Q26, though supply remains constrained," Sobhani said.

Analysts at Goldman Sachs said they're hyper-focused on Nvidia's guidance for the fourth quarter, which they expect should confirm their bullish thesis on the stock.

They added that they expect the company's "break out" quarter to be the first quarter of 2025 as the Blackwell product launch ramps up.

Goldman Sachs expects Nvidia to deliver $34.3 billion in revenue for the third quarter, with adjusted earnings per share at $0.79, which is above consensus estimates.

"We expect strong demand for Nvidia's Hopper-based GPUs (i.e. H100 and particularly the H200) and Spectrum-X (i.e. Ethernet-based Networking product) to drive strong double-digit (%) Data Center revenue growth," Goldman Sachs said.

The strong expected earnings results, combined with Nvidia's current valuation, suggest to Goldman that the stock should perform well going forward.

Goldman Sachs rates Nvidia at "Buy" with a $150 price target.

According to CFRA Research analyst Angelo Zino, investors should manage expectations around guidance for Nvidia's highly anticipated Blackwell launch.

"We caution investors to temper expectations for Blackwell inclusion for the Jan-Q outlook (we conservatively look for $3B-$5B in sales), limiting upside to consensus views in the near term as NVDA likely takes a somewhat conservative stance to provide itself with a buffer," Zino said in a recent note.

Still, Zino expects Blackwell chips will be sold out for much of 2025.

"We expect Blackwell to be supply constrained through CY 25, given heightened demand from hyperscalers to support next-generation data centers. In addition to Blackwell expectations/performance concerns that will likely dominate NVDA's Q&A session on the call, we expect investors to dissect any comments on tariffs/Sovereign AI after Trump's victory," Zino said.

CFRA Research rates Nvidia at "Buy" with a $160 price target.

3rd quarter

• Revenue estimate: $33.25 billion

  • Data center revenue estimate: $29.14 billion
  • Gaming revenue estimate: $3.06 billion
  • Professional Visualization revenue estimate: $477.7 million
  • Automotive revenue estimate: $364.4 million
• Adjusted gross margin estimate: 75%
• R&D expenses estimate: $3.34 billion
• Adjusted operating expenses estimate: $2.99 billion
• Adjusted operating income estimate: $21.9 billion
• Adjusted EPS estimate: 74c

4th quarter

• Revenue estimate: $37.1 billion
• Adjusted gross margin estimate: 73.5%
• Adjusted operating expenses estimate: $3.21 billion

Source: Bloomberg