Nvidia (NASDAQ: NVDA) released third-quarter results for fiscal 2025 after the market close on Wednesday, beating analysts’ expectations across all key metrics. However, despite the strong performance, the company’s stock price has since fallen, reflecting investor unease over its fourth-quarter forecast and rising costs.
At the time of writing, shares are trading 3.22% lower at US$141.95.
Key results exceed expectations
The AI chip leader reported earnings per share (EPS) of $0.81 on revenue of $35.1 billion, beating Wall Street projections of $0.74 EPS and $33.2 billion of revenues. Nvidia’s data center business, which accounts for the bulk of its revenue, generated $30.8 billion, up 112% year over year and well above the $29 billion expected by analysts. Gaming revenue also increased, reaching $3.3 billion from $2.8 billion a year ago.
CEO Jensen Huang touted the results as a reflection of Nvidia’s role at the forefront of the “age of artificial intelligence,” saying: “The demand for Hopper and the anticipation for Blackwell – in full production – are incredible as the Foundation model makers scale pre-training, post-training, and inference.
Hopper and Blackwell are GPU architectures designed to power demanding AI workloads. Hopper, named after computer science pioneer Grace Hopper, includes the flagship H100 chip and is optimized for training and deploying large-scale AI models such as those used in natural language processing and Generative artificial intelligence. Blackwell, Nvidia’s next-generation GPU, is expected to build on the success of Hopper with advances in processing power and efficiency.
The long-awaited results are met with mixed market reactions
The report was highly anticipated, with Nvidia riding a wave of AI-driven growth that had pushed its shares up more than 190% year to date. Investors, however, showed lukewarm enthusiasm. After briefly hitting an intraday record, the stock retreated as markets digested the company’s fourth-quarter forecast.
Nvidia expects fourth-quarter revenue to reach $37.5 billion, plus or minus 2%, slightly above consensus estimates of $37 billion but below more bullish projections of $41 billion. dollars. The cautious outlook, combined with a gross margin forecast of less than 73.5%, down from 75% in the third quarter, dampened sentiment.
Reasons for the decline in stock price
The stock’s decline reflects sky-high expectations for Nvidia, where even strong results fail to support its meteoric rise. Concerns about rising manufacturing costs for next-generation Blackwell chips also weighed on sentiment. Chief Financial Officer Colette Kress acknowledged ongoing supply constraints and predicted that demand for Blackwell GPUs would outstrip supply for several quarters.
Furthermore, geopolitical risks loom. President-elect Donald Trump’s proposed tariffs on chips made in Taiwan – critical to Nvidia’s supply chain – could erode margins or lead to higher costs for customers. Taiwan Semiconductor Manufacturing Company (TSMC) is the main manufacturer of Nvidia GPUs.