Nvidia's strong forecast calms AI bubble jitters, for now

Nvidia CEO Jensen Huang on Wednesday shrugged off concerns about an AI bubble as the company surprised Wall Street with accelerating growth after several quarters of slowing sales.

The chipmaker's stellar third-quarter earnings and fourth-quarter forecast calmed, at least temporarily, investor nerves over concerns an AI boom has outrun fundamentals. Global markets have looked to the chip designer to determine whether investing billions of dollars in AI infrastructure expansion has resulted in an AI bubble.

"There's been a lot of talk about an AI bubble. From our vantage point, we see something very different," CEO Jensen Huang said on a call with analysts, where he touted how much cloud companies wanted Nvidia chips.

"We're in every cloud. The reason why developers love us is because we're literally everywhere," he said. "We're everywhere from cloud to on-premise to robotic systems, edge devices, PCs, you name it. One architecture. Things just work. It's incredible."
He reiterated a forecast from last month that the company had $500 billion in bookings for its advanced chips through 2026.

Shares of the AI market bellwether jumped 5% in extended trading, setting up the company to add $220 billion in market value. Ahead of the results, doubts had pushed Nvidia's shares down nearly 8% in November, after a surge of 1,200% in the past three years.

The broader market has declined almost 3% this month.

After the results, S&P 500 futures rose 1%, showing traders expect the U.S. stock market to open sharply higher on Thursday.

The world's most valuable company said it expected 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. It forecast an adjusted gross margin of 75% for the period, plus or minus 50 basis points, and Nvidia's finance boss Colette Kress said the company plans to hold gross margins in the mid-70% range during fiscal 2027.

Nvidia's third-quarter sales rose 62%, their first acceleration in seven quarters. Sales in the data-center segment, which accounts for a majority of Nvidia's revenue, grew to $51.2 billion in the quarter ended October 26. Analysts expected sales of $48.62 billion.