Nvidia CEO Jensen Huang dismissed concerns about an AI bubble as the chipmaker posted stronger-than-expected growth, calming investors who had worried that the rapid expansion of AI infrastructure was outpacing fundamentals.
The company reported a 62% increase in third-quarter sales, the first acceleration in seven quarters. Revenue from its data-centre segment, which makes up the majority of its business, rose to $51.2 billion for the quarter ending October 26, surpassing analyst expectations of $48.62 billion. Nvidia also forecast fiscal fourth-quarter sales of $65 billion, exceeding the average estimate of $61.66 billion, with adjusted gross margins of 75%.
Nvidia has become a key indicator for the broader AI market, with investors looking to the company to gauge whether multibillion-dollar investments in AI hardware are sustainable. Concerns about an AI bubble had pushed Nvidia shares down nearly 8% in November, after a 1,200% surge over the past three years. Following the earnings announcement, shares jumped 5% in after-hours trading, potentially adding $220 billion to its market value.
“There’s been a lot of talk about an AI bubble. From our vantage point, we see something very different,” Huang said during a call with analysts. He highlighted that Nvidia chips are used widely, from cloud servers and edge devices to robotics and PCs. “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.”
Nvidia has $500 billion in advanced chip bookings projected through 2026. The company has also increased investments in AI firms, including up to $100 billion committed to OpenAI, supplying data-centre chips to support the AI boom. This has raised concerns about a circular AI economy, as some analysts question the sustainability of such high levels of capital spending.
In addition, Nvidia has boosted rental contracts of its own chips to cloud customers, totaling $26 billion in the third quarter, more than double the previous quarter. Four customers now account for 61% of sales, up from 56% in the prior quarter. Some analysts warn that rapid growth could be constrained by practical limits such as power, land, and grid capacity needed to operate large AI data centres.
Huang pointed to the scale and complexity of AI as the main challenge, noting that careful planning across supply chains, infrastructure, and financing is required. Despite being largely locked out of China due to U.S. export restrictions, Nvidia is expanding in the Middle East. The U.S. Commerce Department has approved exports of up to 35,000 Blackwell chips to Saudi Arabia and the United Arab Emirates, worth more than $1 billion.
Investors are closely watching the sector, with Nvidia’s results influencing rivals such as AMD and tech giants including Alphabet and Microsoft. While the company’s earnings surprised positively, some analysts caution that concerns about the sustainability of AI-driven growth may remain.
Nvidia’s performance underscores its central role in the AI revolution and highlights the balance between rapid innovation and practical limits of infrastructure expansion.
