"AI Faith" stirs up a frenzy again! Q3 revenue surged by 94%, NVIDIA remains the unparalleled "version answer"

According to the Zhitong Finance APP, the world's highest market capitalization company, referred to by Goldman Sachs as "the most important stock on Earth" and at the core of the artificial intelligence frenzy, chip giant NVIDIA (NVDA.US) has significantly exceeded analysts' average expectations in its latest quarterly performance, highlighting that the development of AI technology is still in a "very early stage"—specifically, the stage of building AI infrastructure, and NVIDIA remains the most perfect answer to the current "AI infrastructure spending version." The giant's total revenue in the third fiscal quarter surged by 94%, and net profit doubled. The revenue outlook for the next quarter also exceeded average expectations, but did not meet the extremely optimistic expectations set by some analysts, leading these analysts to question whether the dizzying growth is beginning to have limitations, which is the logic behind NVIDIA's stock price declining in after-hours trading.

In its earnings report released on Wednesday Eastern Time, NVIDIA stated that it expects total revenue for the fourth fiscal quarter (ending in January next year) to reach approximately $37.5 billion, with a fluctuation of 2%. Data compiled by institutions show that although the average forecast from Wall Street analysts is $37.1 billion, some analysts have a maximum forecast of $41 billion.

This harsh extreme expectation indicates that the market's excitement for NVIDIA, the "total leader in artificial intelligence," is showing a "surreal" form. In 2024, driven by the global "AI faith," AI believers pushed NVIDIA's stock price up nearly 200%, making it the highest market capitalization company in the world, while in 2023, NVIDIA's stock price had already surged over 240%.

Although the performance outlook did not meet the most extreme and overly harsh expectations, NVIDIA's revenue growth rate over the past two years has been unparalleled. As of the third fiscal quarter ending in October, the revenue was also described as "explosive," reigniting capital's faith in artificial intelligence, which may lead to another "AI carnival" in the global stock market. From a fiscal year perspective, NVIDIA's total revenue is expected to double for two consecutive fiscal years, and more significantly, NVIDIA's quarterly net profit currently far exceeds its revenue scale from the past few quarters.

The latest financial report shows that in the third fiscal quarter of 2025, ending October 27, NVIDIA's total revenue surged by 94% year-on-year, reaching a historic high of $35.1 billion. Excluding certain items, the NON-GAAP earnings per share were $0.81. In contrast, Wall Street analysts had an average expectation of approximately $33.25 billion in revenue for the third fiscal quarter, with NON-GAAP earnings per share expected to be around $0.74. In terms of net profit, under GAAP standards, NVIDIA's Q3 net profit increased by 109% year-on-year to $19.3 billion, and grew by 16% quarter-on-quarter.

NVIDIA's performance in recent years has overwhelmingly surpassed Wall Street expectations. In the past five years, NVIDIA has only once failed to meet the average expectations of Wall Street analysts for a quarterly performance. Moreover, in recent quarters, its actual total revenue has exceeded Wall Street's expectations by at least 20%, which has led analysts to set very high expectations for its performance in recent quarters. However, NVIDIA consistently exceeds these expectations, highlighting the surging demand from global enterprises and core government departments for NVIDIA's high-performance AI GPUs, the most essential infrastructure for artificial intelligence (AI), as society gradually enters the AI era with the emergence of significant generative AI applications like ChatGPT and Sora.

From the expenditure expectations of the tech giants that have released financial reports, American tech giants Meta, Microsoft, Google, and Amazon have shown a continuous surge in spending on NVIDIA's AI GPUs, the most critical artificial intelligence infrastructure, signaling a strong trend of "burning money to buy NVIDIA GPUs." Additionally, leaders in AI applications such as OpenAI, xAI, Anthropic, and Palantir, as well as various government departments focusing on "sovereign AI systems," continue to invest heavily in building AI data centers, with no signs of a slowdown in the global enthusiasm for artificial intelligence.

NVIDIA's data center business revenue alone has far exceeded the latest total revenue of its two most direct competitors in the AI chip field—AMD (AMD.US) and Intel (INTC.US). NVIDIA's net profit for the fiscal year 2025 is even expected to surpass Intel's total revenue, while Intel has been the most profitable chip company in the industry for decades. Today, NVIDIA is regarded as the "new king" of the global chip industry, with a market value far exceeding that of AMD and the established giant Intel.

The latest performance proves that NVIDIA remains the undisputed "strongest shovel seller" in the global AI field, capitalizing on an unprecedented wave of global enterprise investment in AI with an 80%-90% market share in AI training/inference. NVIDIA initially gained global fame by selling graphics processing units (GPUs) for PCs, but after discovering that its parallel architecture is suitable for artificial intelligence and extensive high-performance computing, it has fully committed to AI chips in recent years. With a large number of computing cores capable of executing multiple high-density AI tasks simultaneously and excelling at parallel computing, NVIDIA's AI GPUs have become the most essential hardware in the chip field, establishing an extremely wide moat through the AI GPU + CUDA ecosystem barrier. Especially during AI training, NVIDIA's AI GPUs assist software large models in learning to recognize and respond to natural language inputs from the real world. Since 2023, NVIDIA's AI GPUs have also been widely used in large-scale AI server clusters running super AI large models like the GPT series, a process known as AI inferenceSince the advent of ChatGPT, as AI's influence on the global high-tech industry and technological development has grown stronger, CPUs focused on single-thread performance and general-purpose computing remain an indispensable part of the chip field. However, their status and importance in the chip sector are far less than that of GPUs. After all, the original intention of CPU design was to perform general-purpose computing among various conventional tasks, rather than handling massive parallel computing models and high-density matrix operations like GPUs. Jensen Huang, CEO of NVIDIA, emphasized that the global shift towards artificial intelligence has only just begun. He believes that GPU-accelerated computing, which speeds up specific tasks by breaking them down into smaller parts and processing them in parallel, is becoming dominant.

On the eve of NVIDIA's earnings report, major Wall Street firms collectively raised NVIDIA's target stock price for the next 12 months significantly. Wall Street financial giant Bank of America reaffirmed its "buy" rating for NVIDIA and raised its 12-month target price from $165 to $190; HSBC even raised NVIDIA's target stock price from $145 to $200, which, along with the $200 target price given by Rosenblatt Securities, ranks among the highest expectations on Wall Street. In contrast, NVIDIA's stock price closed at $145.89 on Wednesday.

"The impact of artificial intelligence is increasingly significant, with large tech companies globally investing hundreds of billions of dollars, among which NVIDIA is arguably the biggest beneficiary," said Anina from James Investment. "Overall, its prospects remain very optimistic."

Regarding U.S. policy expectations, with Trump securing a victory in the U.S. election, he has promised to reduce regulation on large companies and cut taxes, increase oil production, and implement strict immigration policies. These indicate that economic growth and inflation are likely to strengthen, which is seen as a positive factor for the stock market. Industries such as banking, technology, defense, and fossil fuels may benefit, especially in technology. According to Trump's own policy framework, the U.S. government under his leadership is likely to focus on accelerating development in cutting-edge technological innovation fields such as artificial intelligence, quantum computing, nuclear fusion, and aerospace.

NVIDIA, the "Protagonist of a Feel-Good Novel"! The AI Boom is in Full Swing, Data Center Revenue Soars

Recently, NVIDIA has surpassed Intel and successfully entered the Dow Jones Index. Shortly thereafter, its total market value surpassed Apple, reclaiming the title of "King of the Stock Market" after five months. We have witnessed how artificial intelligence is reshaping the stock market. However, the "NVIDIA myth" seems far from over! Many Wall Street analysts believe that NVIDIA's stock price surge is far from stopping.

NVIDIA's "path to glory" resembles the core male protagonist of a feel-good novel. Since the end of 2022, NVIDIA's stock price has skyrocketed by an astonishing 850%. From the stock price's low point in October 2022, the increase has reached an incredible 1000%.

The data center business unit, currently NVIDIA's most core business segment, provides the powerful AI computing infrastructure for data centers worldwide through its H100/H200 and Blackwell architecture AI GPUsThe financial report shows that as the global wave of AI deployment is in full swing, the revenue of this business segment has increased by 112% year-on-year, reaching an astonishing $30.8 billion. This figure significantly exceeds Wall Street's expectations and surpasses the combined revenue of Intel and AMD.

"In the past few quarters, people seem to have mainly focused on inflation data, employment data, and 'NVIDIA data,'" said Far Anina, research director at James Investment Research. "NVIDIA's market capitalization surpassing Apple not only indicates that it is one of the biggest beneficiaries of the AI infrastructure cycle but also suggests that people expect the AI boom to continue sweeping the globe." Bank of America stated that NVIDIA's performance may have a greater impact on the S&P 500 index compared to the next non-farm payroll data, CPI, or Federal Reserve decisions.

Statistics show that chip giant NVIDIA currently occupies about 8% of the total weight of the S&P 500 index, contributing approximately 25% to the 21% increase of this benchmark index this year. In June, NVIDIA closed for the first time with the title of "the world's highest market capitalization company," slightly surpassing tech giant Microsoft at that time, becoming the largest listed company globally. However, this glorious title was held for only one day and was subsequently dominated by Apple. In November, NVIDIA surpassed Microsoft and soon after overtook Apple, reclaiming the title of "the highest market capitalization."

In the U.S. stock market, the seven major tech giants, including NVIDIA, known as the "Magnificent Seven," have increasingly high "AI content," and the other "six giants" are NVIDIA's core customers. The seven major tech giants, which hold significant weight in the S&P 500 index and Nasdaq, include: NVIDIA, Apple, Microsoft, Google, Amazon, Meta Platforms, and Tesla. In their recent earnings calls, they emphasized their commitment to making substantial investments in AI, with executives from these tech giants making comments about "continuing to burn cash." Wall Street investment firms generally express that NVIDIA will continue to thrive and remain one of the biggest beneficiaries of the global AI boom in the near future

Jensen Huang Calls Blackwell Demand "Incredible"

Regarding the capacity and demand for Blackwell, which Wall Street is focusing on, NVIDIA CEO Jensen Huang stated that the design flaws of NVIDIA's new product line, the Blackwell architecture AI GPU, have been completely resolved and are now "fully in production." He emphasized that the highly anticipated high-performance AI GPU product is expected to see demand far exceeding expectations for several consecutive quarters. NVIDIA's management highlighted during the earnings call that Blackwell is expected to ship this quarter, with supply ramping up over the next year.

Jensen Huang further noted that the market demand for NVIDIA's previously launched Hopper architecture AI GPUs, namely the H100/H200, remains very strong. His latest remarks dispelled market concerns about Blackwell facing capacity constraints due to thermal and design flaws.

In the earnings statement, Jensen Huang exclaimed that the market demand for both Blackwell and Hopper is "incredible." "The era of artificial intelligence is advancing comprehensively, driving the global transition to NVIDIA's computing power." "As foundational model manufacturers expand the scale of AI pre-training, post-training, and cloud AI inference computing power deployment, the demand for Hopper and the expectations for fully produced Blackwell are—truly incredible."

"Artificial intelligence is changing every industry, every company, and every country," he stated in the earnings statement. "With the comprehensive breakthroughs in physical artificial intelligence, investments in industrial AI robotics are surging, and countries have realized the importance of developing their own sovereign-level AI large models and infrastructure."

NVIDIA aims to maintain its leading position by accelerating innovation. These efforts include a commitment to updating its AI GPU product line annually and providing one-stop AI solutions to help businesses train, develop, and deploy AI applications. With Blackwell, NVIDIA has a range of new chips that are among the strongest in the industry, with significantly enhanced connectivity capabilities compared to other semiconductors.

In the MLPerf Training benchmark tests, Blackwell's performance in the GPT-3 pre-training task is twice that of Hopper per GPU. This means that with the same number of GPUs, model training can be completed faster using Blackwell. For the LoRA fine-tuning task of the Llama 2 70B model, Blackwell's performance is 2.2 times better than Hopper per GPU, indicating that Blackwell has higher efficiency in handling specific high-load AI tasks.

However, manufacturing challenges have slowed down the launch process of Blackwell. NVIDIA stated that the company is still unable to fulfill all received orders, as Jensen Huang mentioned, "the demand is incredible."

NVIDIA once again warned during the earnings call that the supply of Blackwell architecture AI GPUs is very tight. Jensen Huang indicated that supply may become sufficient once TSMC's Blackwell mass production situation improves"The key issues surrounding Blackwell's production growth and customer concentration remain the focus of attention," said Jacob Bourne, an analyst at Emarketer, in a report. "NVIDIA has almost no room for execution errors by 2025."

The wave of AI spending is far from over, NVIDIA's stock price "surge journey" continues

Global tech giants are ramping up spending to build AI data centers to meet the nearly endless demand for AI inference/training computing power. As tech giants make comments about continuing to burn cash around increasing AI capital expenditures, Wall Street investment firm D.A. Davidson stated that NVIDIA will continue to thrive and remain one of the biggest beneficiaries of the global AI boom for some time to come. "For example, as long as Microsoft continues to spend heavily to upgrade its massive data centers, we believe it will continue to transfer shareholder value from Microsoft to NVIDIA," the D.A. Davidson research team stated.

When discussing market demand for AI chips, TSMC's leader, C.C. Wei, stated at an earnings conference that the outlook for AI chip demand is very optimistic and emphasized that TSMC's customers' demand for CoWoS advanced packaging far exceeds the company's supply. "The company will do its utmost to meet customers' demand for CoWoS advanced packaging capacity. Even if capacity doubles this year and continues to double next year, it will still be far from enough." TSMC's CoWoS S/L/R advanced packaging capacity is crucial for the production capacity of broader AI chips like NVIDIA's Blackwell AI GPU.

According to the latest forecast data from Wall Street financial giant Citigroup, by 2025, the data center-related capital expenditures of the four largest tech giants in the U.S. are expected to grow by at least 40% year-on-year, with these massive capital expenditures largely tied to generative AI, indicating that the computing power demand for AI applications like ChatGPT remains substantial. The four tech giants referred to in Citigroup's research report are global cloud computing giants Amazon, Google, Microsoft, along with social media parent company Facebook and Instagram. Citigroup's latest research report predicts that by 2025, the data center capital expenditures of these four tech giants will increase by 40% to 50% year-on-year. The significant incremental spending by tech giants on data centers is expected to drive the stock prices of data center network technology giants like NVIDIA and Arista Networks, which are considered "shovel sellers" in the global AI field, to continue to attract international capital.

Citigroup's analysis team's latest report also discusses the choice between the customized AI ASIC and AI GPU required for the indispensable data center AI servers used for training/inference of large AI models, pointing out that AI GPUs have become the preferred choice due to their hardware flexibility and general adaptability to rapidly evolving AI applications and updates of large AI models. Especially with the extremely wide moat established by the super-performance AI GPU + CUDA ecosystem barrier, NVIDIA is capable of maintaining a long-term market share of up to 80%-90% in the data center AI server fieldThe CUDA ecosystem barrier can be described as NVIDIA's "strongest moat" and is also considered NVIDIA's "external plug-in." NVIDIA has been deeply involved in the global high-performance computing field for many years, especially with its self-developed CUDA computing platform, which has become the preferred hardware-software collaborative system in high-performance computing fields such as AI training/inference.

The CUDA accelerated computing ecosystem is a parallel computing acceleration platform and programming assistance software exclusively developed by NVIDIA, allowing software developers and engineers to use NVIDIA GPUs to accelerate parallel general-purpose computing (only supports NVIDIA GPUs and is not compatible with mainstream GPUs such as AMD and Intel). CUDA is an extremely relied-upon platform for developing generative AI applications like ChatGPT, and its importance is on par with hardware systems, being crucial for the development and deployment of large AI models. With its high technical maturity, absolute performance optimization advantages, and extensive ecosystem support, CUDA has become the most commonly used and widely adopted collaborative platform in AI research and commercial deployment.

The globally renowned strategic consulting firm Bain predicts that as AI technology rapidly proliferates and disrupts businesses and economies, the market size related to AI is expanding, expected to reach $990 billion by 2027. In its fifth annual "Global Technology Report" released on Wednesday, the consulting firm noted that the overall AI market size, including AI-related services and core hardware such as AI GPUs, will grow annually by 40% to 55% from last year's $185 billion. This means that by 2027, it will generate a massive revenue of $780 billion to $990 billion.

The "burning money wave" for artificial intelligence among global enterprises, including the "six giants," remains unstoppable, and the stock logic closely related to AI chips is extremely robust. The stock prices of AI chip leaders like NVIDIA may not have stopped rising yet. Especially for NVIDIA, which holds an 80%-90% share in the data center AI chip market, its stock price may continue to hit historical highs, breaking through the widely expected $165 mark set by Wall Street analysts, and even reaching the highest expectation of a $200 stock price may just be a matter of time.