Nvidia delivered another impressive quarterly earnings report on Wednesday, surpassing Wall Street estimates with $35.1 billion in sales, representing a $5 billion sequential increase driven primarily by data center operations. The world’s most valuable company continues to dominate the AI chip market, though analyst reactions were mixed regarding future growth prospects.
Wedbush analysts, led by Dan Ives, issued an enthusiastic assessment of the results, calling it “another earnings performance for the ages” and comparing CEO Jensen Huang to the “Godfather of AI.” The firm highlighted that Nvidia’s next-generation Blackwell chips appear to be ramping faster than expected with no overheating issues, tracking massive demand throughout the Asia supply chain. Ives characterized the Blackwell release as “the LeBron of chip releases,” emphasizing its unprecedented trajectory.
However, some analysts expressed caution about potential growth deceleration. Konstantin Oldenburger at CMC Markets noted that while Nvidia exceeded forecasts, the company’s gross margin is expected to decline from 75% to 73% in the current quarter—the first downward movement after consistent increases. This shift has raised concerns among investors accustomed to Nvidia’s seemingly unstoppable growth story.
Deutsche Bank analysts described the market reaction as “tepid,” noting that while third-quarter sales of $35.1 billion beat the $33.2 billion estimate, the fourth-quarter guidance of $37.5 billion only slightly exceeded the average analyst estimate of $37.1 billion. They characterized the outcome as “slightly underwhelming” relative to the loftiest expectations.
Dan Coatsworth at AJ Bell emphasized that the margin decline shouldn’t trigger panic, particularly when gross margins remain above 70%—levels most companies can only dream of achieving. He noted that Nvidia remains confident margins will rebound as production volumes increase for Blackwell chips.
HSBC analysts maintained an optimistic outlook, expecting “significant” earnings upside for the 2026 financial year despite near-term gross margin pressure. Meanwhile, Stephen Yiu, who manages the $1.4 billion Blue Whale growth fund, has invested the maximum 10% allocation in Nvidia stock and told Bloomberg TV he wishes he could buy more, emphasizing that “Nvidia remains the center of that AI transformation” and expressing strong conviction in how AI will fundamentally change daily life.
Key Quotes
In another earnings performance for the ages Nvidia delivered a $2 billion top-line beat with $35 billion of sales showing a $5 billion sequential increase driven by flagship data center sales.
Wedbush analyst Dan Ives provided this enthusiastic assessment, characterizing Nvidia’s results as worthy of being “framed and hung in the Louvre.” This reflects the continued exceptional performance of the AI chip leader and the central role of data centers in driving AI infrastructure growth.
The LeBron of chip releases, next generation Blackwell appears to ramping even faster than expected with NO overheating issues and appears to be on a massive demand trajectory ahead of the Street.
Dan Ives used this sports analogy to emphasize the successful launch of Nvidia’s Blackwell chips, which are critical for the next wave of AI applications. The absence of overheating issues is particularly important given previous concerns about thermal management in high-performance AI chips.
Investors have enjoyed stellar share price gains from Nvidia over the past two years and that’s made them think it is invincible. In reality, a small decline in margins is not a reason to panic, particularly when they are still over 70% which many companies could only dream of.
Dan Coatsworth at AJ Bell provided this measured perspective, cautioning against overreaction to the margin compression. His analysis helps contextualize that even with declining margins, Nvidia maintains exceptional profitability that remains the envy of the semiconductor industry.
Nvidia remains the center of that AI transformation.
Stephen Yiu, manager of the $1.4 billion Blue Whale growth fund, made this statement to Bloomberg TV while explaining why he invested the maximum 10% allocation in Nvidia. His conviction underscores institutional investors’ continued belief in Nvidia’s central role in the AI revolution despite near-term concerns.
Our Take
Nvidia’s earnings reveal the maturing dynamics of the AI infrastructure market. While the company continues to post extraordinary results that would be considered exceptional for any technology company, the shift from “blowout beats” to “modest beats” signals that the market is transitioning from the early explosive growth phase to a more sustainable, albeit still robust, expansion period.
The Blackwell chip success is the real story here—technical execution at this scale is incredibly difficult, and Nvidia’s ability to ramp production without thermal issues demonstrates deep engineering competence. However, the margin compression suggests increasing competition or customer negotiating power, possibly from hyperscalers like Microsoft, Google, and Amazon who are also developing their own AI chips. This doesn’t signal Nvidia’s decline but rather the natural evolution of a maturing market where the company must balance growth with profitability. The AI infrastructure buildout has years to run, and Nvidia remains the clear leader.
Why This Matters
This earnings report is crucial for understanding the trajectory of AI infrastructure investment and the broader artificial intelligence industry. As the dominant supplier of AI chips powering everything from ChatGPT to autonomous vehicles, Nvidia’s performance serves as a bellwether for AI adoption across enterprises globally.
The mixed analyst reactions reveal an important inflection point: while AI demand remains robust, investors are beginning to scrutinize sustainability and competition more carefully. The slight margin compression, though still exceptional by industry standards, signals that Nvidia may face pricing pressure or increased production costs as it scales Blackwell chip manufacturing.
The successful Blackwell ramp is particularly significant because these next-generation chips are essential for training and deploying increasingly sophisticated AI models. Any delays or technical issues could have cascaded throughout the AI ecosystem, affecting major tech companies’ AI roadmaps. The confirmation of strong Blackwell demand without overheating problems validates continued enterprise investment in AI infrastructure and suggests the AI boom has further room to run, impacting everything from cloud computing to edge AI applications.
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