NVIDIA's Latest Earnings Report: What You Should Know

 

NVIDIA just dropped some pretty incredible numbers for Q3 FY25—$35.1 billion in revenue, up 92% year-over-year, and earnings per share (EPS) of $0.81, a 103% increase from last year. These numbers absolutely crushed expectations. But here’s the curveball: NVIDIA’s stock dropped by 5% after hours. Seems a little off, right? Let’s dive in.

 

NVIDIA’s data center business is the real MVP here. It grew by a staggering 112% YoY to $30.77 billion. This massive growth is driven by the growing demand for AI chips. Tech giants like Microsoft, Google, Amazon, and Meta are ramping up their AI investments, and NVIDIA is right there, supplying the chips.

 

The Hopper chips are still in huge demand, but the real buzz is around Blackwell, the new chip that just started shipping in Q4. CEO Jensen Huang called the demand for Blackwell “insane.” The CFO also mentioned that Blackwell could easily beat revenue expectations, and once production ramps up, profit margins could hit the mid-70s. Definitely a solid bet for the future, right?

 

While data centers are driving the bulk of the revenue, NVIDIA isn’t just about AI chips. Their gaming revenue rose 15% YoY to $3.28 billion, and their automotive and robotics business saw a huge 72% jump to $449 million. So, they’re diversifying beyond just AI, which is a positive sign for future growth.

 

NVIDIA’s gross margins slipped slightly to 75% (down from 75.7% last quarter). It’s a small dip, and it’s mainly due to the increased production costs for Blackwell. Margins might dip a bit more in Q4, but nothing too worrying. The real standout here is the company’s free cash flow, which surged 137% YoY to $16.79 billion. That’s a lot of cash flowing in, and NVIDIA is using it for share buybacks and returning value to shareholders. But even with these buybacks, shareholder returns are still relatively low, so expect that to pick up in the near future.

 

It’s not all smooth sailing, though. There are a few risks worth keeping an eye on. First, geopolitical issues—if Trump returns to office, could we see new restrictions on chip exports or other tech-related bans like we did a couple of years ago? These things could have a major impact on NVIDIA’s business.

 

Then there’s the ongoing supply chain issue. While NVIDIA is catching up with production, demand is still outpacing supply. If this continues, it could slow growth in certain areas, especially in the short term.

 

NVIDIA’s guidance for Q4 FY25 looks solid, with expected revenue around $37.5 billion, give or take 2%. But, as we mentioned earlier, the market was hoping for closer to $39-$40 billion, so that could explain the stock dip. Margins are expected to dip slightly, but with continued growth in the data center business and the strong demand for AI chips, NVIDIA is in a good position for the future.

 

NVIDIA’s Q3 performance was solid—the data center business is booming, AI chips are in high demand, and Blackwell is set to take things to the next level. But there are some risks, mainly around geopolitics and supply chain issues, that could disrupt the momentum. For now, though, the future looks pretty promising.

 

So, what do you think? Is this dip just a temporary blip?