Nvidia Smashes Expectations Again. The Question Now Is Whether the AI Cycle Can Keep Up

Nvidia has delivered another blockbuster quarter, beating Wall Street’s expectations on revenue and earnings and offering a bullish outlook that sent its shares up 3.7 per cent after hours, adding roughly $169 million to its market value. In a market increasingly jittery about the sustainability of AI spending, Nvidia’s results landed like a dose of cold water on a hot circuit.

For the fourth quarter, Nvidia is projecting revenue of $65 billion, plus or minus 2 per cent, well ahead of the $62 billion analysts expected. “Blackwell sales are off the charts, and cloud GPUs are sold out,” chief executive Jensen Huang said. The company, he added, has now “entered the virtuous cycle of AI” as demand spreads across industries, geographies and workloads.

The growth engine is still the data centre

The headline numbers underline just how dominant Nvidia has become in the infrastructure layer of AI. Third quarter earnings per share came in at $1.30 on $57.01 billion in revenue, trouncing analyst estimates of $1.26 and $55.2 billion. A year ago, the company posted $0.81 in EPS and $35.1 billion in revenue, making this quarter’s leap even more dramatic.

The data centre division remains the colossus behind these results, generating $51.2 billion versus the $49.3 billion analysts had pencilled in. Nvidia’s gaming business, once the crown jewel, now looks modest by comparison at $4.3 billion, just shy of the $4.4 billion estimate.

Chief financial officer Colette Kress said Blackwell Ultra is now Nvidia’s leading architecture across all customer categories, while demand for the prior generation Blackwell parts remains strong. Revenue from the China-specific H20 chip was “insignificant,” she noted, underscoring the effect of U.S. export restrictions.

A trillion dollar question

The results arrive in a market that has grown uneasy with the sheer velocity of AI investment. Nvidia’s market cap briefly topped $5 trillion last month, and the arms race shows little sign of slowing. Rival AMD’s chief executive Lisa Su recently said she believes the data centre market could reach $1 trillion by 2030. Nvidia itself has suggested that global data centre capital spending could be in the $3 trillion to $4 trillion range by the end of the decade.

Those projections fuel optimism, but they also spark scepticism. Investor Michael Burry, whose housing-market short in 2008 made him a cult figure, recently warned that companies from Meta to Oracle are artificially inflating earnings by understating depreciation on massive data centre infrastructure. Barclays last year called depreciation the “not-so-hidden” cost of AI.

Against that backdrop, Nvidia’s relentless growth can make the company look like both the engine and the pressure point of the AI cycle. SoftBank and Peter Thiel’s hedge fund recently sold their Nvidia stakes, a signal that even some of the most AI-forward investors are nervous about valuations and capex intensity.

Victim of its own success

Business Insider posed a pointed question: could Nvidia become a victim of its own success. The company’s aggressive cadence, with Huang targeting a new chip every year, ensures a constant stream of higher performance products for customers. But it also exposes hyperscalers to the risk of rapid obsolescence. In an era when firms are already uneasy about the scale of AI spending, the possibility that hardware will need to be refreshed every couple of years makes the investment case trickier.

Nvidia’s roadmap has become a double edged sword. On one side, it promises continuous performance leaps that keep demand high. On the other, it pressures customers into a cycle of perpetual upgrades, inflating both capex and depreciation and raising the stakes of any slowdown in AI workloads.

The stock’s momentum is undeniable

Despite the broader market wobble, Nvidia’s stock is up more than 37 per cent year to date and 25 per cent over the past twelve months. AMD, chasing hard, has gained 82 per cent in the same period. For all the talk of overheating, the GPU maker remains the market’s default linchpin for AI optimism.

Nvidia may not only be powering the AI boom but defining the expectations around it. The company rarely fails to beat forecasts, and investors have grown accustomed to seeing the bar rise quarter after quarter. That dynamic can work in Nvidia’s favour, but it also tightens the margin for error. A miss, even a small one, could intensify concerns that the AI investment cycle is running ahead of reality.

For now, though, Nvidia remains the one company investors trust most to prove that the AI economy is not losing momentum. Wednesday’s earnings did just that. Whether it can keep delivering at this pace is the question that will hang over the stock long after the after-hours rally fades.