The artificial intelligence (AI) semiconductor corporations Nvidia released for the third quarter are warming up tech stocks again. Strong results that could quell the widespread "AI bubble theory" in the market have been confirmed.
Early that morning, Nvidia said it recorded total revenue of $57,006,000,000 (about 83.4 trillion won) in the third quarter (Aug.–Oct.). It rose 22% from the previous quarter and 62% from a year earlier, rewriting the largest quarterly results on record. Earnings per share (EPS) came in at $1.30, beating the market consensus of $1.25.
What drove the results was clearly the data center institutional sector. Revenue in that institutional sector was tallied at $51,215,000,000, up 66.4% year over year, setting an all-time high. The gaming institutional sector also showed a steady trend, recording $4,265,000,000 in revenue.
Recently, tech stocks had been undergoing a correction amid concerns about AI overheating. Nvidia's share price has risen about 38% since the start of the year, but after hitting a record high last month, it fell about 10%, entering a breather. In addition, news that Peter Thiel's hedge fund and SoftBank partially sold their Nvidia equity also weighed on the stock.
After the earnings release, Nvidia's share price is rising in after-hours transaction. As of 5:19 p.m. Eastern time, the stock was up 5% at $196. Broadcom (2.34%), Alphabet (1.37%) and Tesla (1.11%) were also strong in tandem.
Nvidia projected that growth will continue in the fourth quarter (November–January next year) and issued revenue guidance of $65,000,000,000 (about 95.55 trillion won).
This positive outlook could serve as an opportunity to quell, to some extent, the AI bubble theory that has weighed on the stock market recently. Nvidia's results are interpreted as a gauge of whether the AI investment boom is healthy, and because the results beat expectations, it could be taken to mean there is no problem with the situation.
Nvidia Chief Executive Officer Jensen Huang said, "Blackwell revenue is growing explosively, and graphics processing units (GPU) for cloud use are already sold out," adding, "Computing demand is accelerating across training and inference, and each institutional sector is growing exponentially."
However, external variables such as China export controls and intensifying competition remain risk factors, so market volatility could increase despite strong results.
Gene Munster, an analyst at Deepwater Asset Management, said, "If Nvidia's guidance is significantly higher, concerns about AI overinvestment could resurface," noting, "In the end, investor reaction is an unpredictable realm."