Instant View: Nvidia Q3 revenue forecasts suggest AI trade has more to run

(Reuters) -AI chipmaker Nvidia, the dominating force behind the U.S. stock market rally since 2023, forecast third-quarter revenue above Wall Street estimates on Wednesday.

Helped by robust demand for its artificial intelligence chips from cloud providers expanding infrastructure to power generative AI technology, Nvidia expects revenue of $54 billion, plus or minus 2%, in the third quarter. That compared with analysts' average estimate of $53.14 billion, according to data compiled by LSEG.

Shares of the world's most valuable firm were down 2.4% in extended trading, paring a knee-jerk loss after the report. NVDA gained more than a third so far in 2025 to outpace the benchmark S&P 500 Index's year-to-date rise of nearly 10%.

COMMENTS:

TAUFIQ RAHIM, PRINCIPAL, 2040 ADVISORY

"The biggest driver of Nvidia revenue is Compute. This is the first time that revenue platform has declined quarter-on-quarter, since being reported. The decline of 1% is masked by the growth in networking. This is part of an overall challenge to continue to meet Wall Street expectations of hyper-growth. The overall revenue growth of 6% quarter over quarter is the first time it has had single-digit rather than double-digit growth since the beginning of the AI boom."

“If there is not a deal with China it raises questions how future revenue expectations can be sustained for the mega cap companies. In addition, the risk of contagion is high because the revenue models are all interlinked. Should the AI sector be in the midst of a bubble as Sam Altman has contended, it makes the recent S&P rally look overvalued.”

“The implications are bearish in the medium-term but in the short-term it may not have an effect because there are built-in drivers of growth across the AI industry, not just in America but also in global markets.”

THOMAS MARTIN, SENIOR PORTFOLIO MANAGER, GLOBALT INVESTMENTS, ATLANTA GEORGIA

"The overall AI trade is still very much intact. Nvidia said demand is just really, really high. So to the extent that you believe that, the AI trade is still at the very early stages."

"There's nothing really to suggest that the AI trade is over. When you have something that is new, and it's growing as fast as it is, and all of the huge capex announcements from the hyperscalers, it's evidence that we're in the early stages. there's no reason that I can see that you want to sell this off to any great degree."

WILL RHIND, FOUNDER AND CEO, GRANITESHARES

"The market has gotten so used to NVIDIA delivering blowout earnings and data center growth that anything short of that feels like a disappointment. The modest miss on data center revenue is more a reminder that those huge growth rates are going to slow eventually."

BRIAN MULBERRY, SENIOR PORTFOLIO MANAGER, ZACKS INVESTMENT MANAGEMENT

"It is double beat on top and bottom line including the $8 billion China cost. After hours even with this strong outperformance the stock is down more than 3% - a signal that the rate of growth is slowing and that causes price momentum to slow in the shares.

"We saw this with Tesla at times when they would have strong financials but guidance was slowing as capacity was meeting demand which ultimately slows the rate of growth. Now NVDA is “only” growing at 50-55% and that is much less than the 100%+ revenue growth from last year. As that momentum slows, so does the energy in the stock.

"Manufacturing operations seem to be growing at a pace that forward guidance should be easily intact going forward. It looks like they stated the China impact (opportunity costs) of $8 billion which is right on target with Jensen’s previous public statements and in line with Wall Street expectations."

DAVID WAGNER, HEAD OF EQUITY, APTUS CAPITAL ADVISORS

"The negative stock reaction feels like a bit of an incorrect knee-jerk reaction - the company is still growing over 50% on their guidance at a $50B quarterly revenue run rate - that's remarkable, even for the current valuation. I actually thought the best part of the report was the gross margin guidance of 73.5% showing resilience in profitability, even without any China H20 revenue. I want to be buying the pullback as I am sure management will weave a bullish demand story on the conference call."

NICK FRASSE, PRODUCT MANAGER, VANECK ASSOCIATES, NEW YORK “My takeaway is that these numbers are not unexpected, nor is this reaction. The market has begun to factor in that Nvidia can continue to beat most expectations in spite of headwinds and questions like what they will have to pay to continue selling to China. Their earnings beats and growth in EPS have become more normalized as investors understand their business model better. In the early stages of all this excitement, they had crazy beats that seemed to come out of nowhere; no one then had expected a gaming company to have this amazing AI pivot. Now we look at their business model and see that they don’t have the capital spending drag that vertically integrated companies do, but they’re benefiting from all the money that the hyperscalers clearly continue to keep spending on AI.

"We launched the VanEck Fabless Semiconductor ETF exactly a year ago today, and Nvidia is its largest holding at 20.67% of the fund right now. These results give us confidence that the hyperscalers are not slowing down, and that it’s getting to the point now where as the Magnificent 7 companies continue to grow, it’s all compounding in their favor. This technology is allowing them to drive revenue higher – and then to spend more of that revenue on more technology.”

MATT ORTON, HEAD OF ADVISORY SOLUTIONS, RAYMOND JAMES INVESTMENT MANAGEMENT, TAMPA BAY AREA

"I think it should be a positive read-through eventually, after the dust settles, to the rest of the AI trade, and the fact that there's still a tremendous amount of growth that's happening."

"For Nvidia, it's more of just calibration of expectations, but the fact that you saw such strong growth, particularly across the data centers, and just the absolute numbers that are associated with the revenues that are coming in, I think all of that is a sign that there is still a lot of room to run with respect to the AI capex story."

"The mega caps are the ones propelling a lot of the capex that Nvidia is benefiting from. But obviously Nvidia still is growing, is able to sell. If anything, this just highlights that there's a lot of durability to this (AI) trade, and that, I think that the businesses of these hyperscalers can continue to accelerate, and you're not seeing any sort of signs of a slowdown being reflected in the results of Nvidia."

"The results from Nvidia will just reaffirm the fact that we're not in an AI bubble."

DIMITRI ZABELIN, SENIOR ANALYST, AI, PITCHBOOK, SAN FRANCISCO, CA

"Since the onset of the AI boom in late 2022, the company has largely beaten forecasts, propelled by explosive growth in its data center division.

"As U.S. hyperscaler demand continues to expand, Nvidia is diversifying by turning to sovereign buyers to anchor the next wave of adoption, positioning national governments as strategic clients for its hardware.

"PitchBook’s comp sheet analysis also shows hyperscalers and AI infrastructure leaders outperforming benchmarks, underscoring durable demand for compute hardware as governments and enterprises step up procurement."

LARRY TENTARELLI, CHIEF TECHNICAL STRATEGIST, BLUE CHIP DAILY TREND REPORT

"In the very short-term, the stock is seeing some downside testing, as they did not drastically exceed the consensus forecasts. Beyond the short-term volatility, Nvidia remains the benchmark Artificial Intelligence stock and the most direct way to invest in the theme.

"The AI trade has been the major driver of this bull market over the past 30 months and we expect that both AI and Nvidia will continue to lead. 

"CEO Jensen Huang’s comments on the conference call will be closely monitored by markets, but barring any slowdown comments from Huang, we would be buyers of Nvidia on any near-term weakness. In our view, this is the dominant AI market leader to own."

CHUCK CARLSON, CHIEF EXECUTIVE OFFICER, HORIZON INVESTMENT SERVICES, HAMMOND, INDIANA

    The results "were okay. They weren't blow-the-doors-off, but nor were they bad. And I think the stock price movement is going to depend a lot on what they say on the earnings call, especially if they give color on China."

    "I think people were a little disappointed in the data center number, which looks like the sequential growth was about 5% ... and I think people might have been looking for a little bit more on that side."

    "I'm not surprised that the stock in the after-market is down a bit, but it is not down a ton, especially given the strength that the stock is showing so far this year."

(Compiled by the Global Finance & Markets Breaking News team)