Track Hyper | AI-driven NVIDIA's third-quarter report exceeds expectations

Author: Zhou Yuan / Wall Street News

NVIDIA's financial report for the third quarter of fiscal year 2025 shows that as of October 27, 2024, NVIDIA achieved revenue of $35.1 billion, a year-on-year increase of 94% and a quarter-on-quarter increase of 17%. Under GAAP rules, it achieved a net profit of $19.309 billion, a year-on-year increase of 109% and a quarter-on-quarter increase of 16%; the gross margin was 74.6%, exceeding NVIDIA's previous performance guidance of $32.5 billion.

Looking at such a brilliant financial report, various institutions are bullish: Morgan Stanley raised NVIDIA's target price from $160 to $168; 17 Wall Street analysts raised NVIDIA's stock target price, including Citigroup, TD Cowen, Mizuho, and Wedbush, all raising NVIDIA's target price to $175.

Goldman Sachs also raised NVIDIA's target stock price from $150 to $165, believing that "NVIDIA's revenue will exceed $200 billion next year."

JP Morgan analyst Harlan Sur believes that "NVIDIA maintains a 1-2 step advantage over its competitors with its silicon, hardware, software platform, and strong ecosystem. Over time, NVIDIA will maintain an active pace of launching new products and make more product segments, leaving its competitors behind."

From the overall financial report, NVIDIA's innovation in the AI field is the key driver of its financial growth.

Currently, NVIDIA's business structure is mainly divided into data center business, gaming and AI PC business, professional visualization business, and automotive and robotics business.

The data center business is the main source of NVIDIA's revenue growth, accounting for as much as 87%, with third-quarter revenue reaching a record $30.8 billion, a year-on-year increase of 112% (but the growth rate in the previous quarter was 154%), and a quarter-on-quarter increase of 17%.

Among them, the demand from cloud service providers (CSPs) accounts for about 50% of data center revenue, with a year-on-year increase of over 200%; consumer internet revenue doubled year-on-year.

This growth is mainly attributed to the following factors: First, the construction of supercomputing centers. With the increasing global demand for high-performance computing, the construction of supercomputing centers has driven the demand for GPUs. NVIDIA's GPUs, due to their excellent computing power and energy efficiency, have become the preferred choice for supercomputing centers.

Secondly, stable ecological partnerships. NVIDIA has expanded its partnerships with companies such as AWS, Lenovo, and Ericsson, which have brought stable orders and revenue sources to NVIDIA.

Third, the demand for AI and machine learning. The growth of the data center business has also benefited from the rapid development of AI and machine learning technologies. NVIDIA's GPUs provide strong support for these technologies, especially in training and inference.

The gaming and AI PC business also performed well in the third quarter, with revenue of $3.3 billion, a year-on-year increase of 15% and a quarter-on-quarter increase of 14%. This growth is mainly due to the increased demand for GPUs from personal computers and laptops, as well as the increase in revenue from gaming console chips.

The launch of 20 GeForce RTX and DLSS games by NVIDIA, along with the release of new RTX AI PCs from ASUS and MSI, contributed to this growth The revenue of the professional visualization business in the third quarter was $486 million, a year-on-year increase of 17% and a quarter-on-quarter increase of 7%. This growth reflects the demand for high-performance graphics processing in professional fields, particularly in design, engineering, and scientific computing.

The automotive and robotics business generated $449 million in revenue in the third quarter, a year-on-year increase of 72% and a quarter-on-quarter increase of 30%. This growth was mainly driven by the increased demand for autonomous vehicle chips and the chips sold by NVIDIA for robotics.

The new electric SUV based on NVIDIA accelerated computing launched in collaboration with Volvo, as well as partnerships with companies like Toyota and Ola Motors, contributed to this growth.

Not only did NVIDIA achieve significant results in the third quarter, but its financial outlook for the fourth quarter is also very positive: approximately $37.5 billion in revenue is expected, with a gross margin of about 73%-73.5%.

This outlook demonstrates NVIDIA's confidence in the future market. Despite investor concerns about a slowdown in NVIDIA's chip sales, the company is expected to maintain its leading position in the global technology industry, thanks to its deep expertise in AI and high-performance computing, as well as its keen insights into future technological trends.

Despite facing market competition and supply chain challenges, NVIDIA's long-term growth potential and leadership in the AI field make it an important player in the global technology industry. As NVIDIA continues to push the boundaries of AI technology, its future financial performance and market influence remain highly anticipated by the market.

In the past two months, NVIDIA's stock price has risen over 20%, reaching a new high during intraday trading on Thursday, but closed slightly lower, with a modest increase of 0.53%. Year-to-date, NVIDIA's stock price has nearly doubled, and it has increased more than ninefold over the past two years, with a total market capitalization of nearly $3.6 trillion, the highest in the world