Nvidia announces exceptional Q3 performance, fueled by a substantial increase in demand for AI.

Nvidia made headlines today by announcing record-breaking revenue for its third fiscal quarter of 2024, which concluded on October 31, 2023. The company exceeded Wall Street’s expectations with remarkable financial results.

Nvidia, a prominent player in graphics processing units (GPUs) and AI chips, reported an astonishing Q3 revenue of $18.2 billion. This represented a substantial year-over-year increase of 206% and a robust sequential growth of 34%. Notably, Nvidia’s data center division experienced remarkable growth, soaring by 279% annually and 41% sequentially, achieving a total revenue of $14.51 billion. This segment accounted for an impressive 79% of the company’s total Q3 revenue.

In terms of earnings per diluted share, Nvidia exhibited exceptional performance. The company recorded GAAP earnings of $3.71 for the quarter, which marked a more than 12-fold increase compared to the same period the previous year and a 50% surge from the previous quarter. Meanwhile, non-GAAP earnings per diluted share reached $4.02, a nearly six-fold growth from a year ago and a 49% increase from the previous quarter.

CEO Jensen Huang attributed this robust growth to the broader industry shift toward accelerated computing and generative AI. He highlighted how large language model startups, consumer internet firms, and global cloud service providers were early adopters, with further waves of adoption on the horizon. Nations, regional cloud service providers, enterprise software companies, and enterprises are all investing in AI and automation, contributing to Nvidia’s success.

Huang shared his sentiments on the significance of Nvidia’s impact on the industry, emphasizing the company’s GPUs, CPUs, networking solutions, AI foundry services, and Nvidia AI Enterprise software as major drivers of growth, marking the ascent of the generative AI era.

In a nostalgic touch, Huang mentioned his visit to the Denny’s restaurant in San Jose, California, where Nvidia had its humble beginnings as a startup. Remarkably, the company’s value now stands at an astounding $1.23 trillion.

Nvidia’s data center segment encompasses server GPUs, networking, and AI cloud software. Analysts had anticipated Q3 revenues of $16.18 billion and earnings per share of $3.37.

Looking ahead to the fourth fiscal quarter, which concludes on January 31, 2024, analysts predict revenues of $17.86 billion and earnings per share of $3.77. Nvidia’s after-hours stock price currently stands at $495.55 per share, experiencing a marginal decline of less than 1%.

Nvidia’s own outlook for the fourth quarter of fiscal 2024 anticipates revenues of $20 billion, with a margin of plus or minus 2%. Gross margins for both GAAP and non-GAAP are projected to be in the range of 74.5% to 75.5%, with slight variations of up to 50 basis points.

Operating expenses for GAAP and non-GAAP are expected to hover around $3.17 billion and $2.20 billion, respectively. Additionally, other income and expense, both GAAP and non-GAAP, are estimated to reach approximately $200 million, excluding gains and losses from non-affiliated investments.

Nvidia faces challenges related to regulatory restrictions on the sale of high-end computing devices, like Nvidia’s Hopper chips, to China. While sales in this sector are expected to decline significantly in the fourth quarter, Nvidia is actively working on regulation-compliant solutions in collaboration with the U.S. government for China and the Middle East. The outcome of these efforts may take several quarters to materialize.

Historically, China has represented 20% to 25% of Nvidia’s data center revenue, and the company anticipates a substantial decline in Q4, with limited visibility for the long-term impact.

Nvidia has announced the Nvidia HGX H200, featuring the new Nvidia H200 Tensor Core GPU, with systems expected to be available in the second quarter of the following year. Jensen Huang emphasized the significance of generative AI, noting its transformative potential across various industries, particularly in the trillion-dollar software sector.

Huang also mentioned that the Grace Hopper superchip platform is now in production.

In addition to its data center success, Nvidia’s gaming division achieved Q3 revenue of $2.86 billion, marking a 15% increase from the previous quarter and an impressive 81% growth compared to the previous year. The quarter saw the release of innovative technologies such as DLSS 3.5 Ray Reconstruction and TensorRT-LLM for Windows, contributing to the expansion of Nvidia’s gaming portfolio. GeForce Now, the company’s cloud gaming platform, boasts a vast library of over 1,700 games.

Nvidia’s professional visualization division reported revenue of $416 million in Q3, reflecting a 10% quarterly growth and a remarkable 108% annual increase. The company highlighted its collaboration with Mercedes-Benz, which utilizes Nvidia Omniverse to create digital twins for planning and operating manufacturing plants.

For the automotive sector, Nvidia reported third-quarter revenue of $261 million, up 3% from the previous quarter and 4% from a year ago.

Nvidia is actively engaged with the government of India to support the enhancement of its internal computing infrastructure. Kress emphasized that national investment in computer infrastructure is a global priority.

Jensen Huang underscored the significance of sovereign AI clouds, expressing Nvidia’s ambition to empower every company to build its own customized AI models.