We’re now two years removed from OpenAI’s launch of ChatGPT, and there’s no doubt which company has been the biggest winner of the generative AI revolution so far.
Nvidia (NASDAQ: NVDA), now best known for making cutting-edge chips capable of powering AI applications like ChatGPT, has seen its stock jump by 10 times since the beginning of 2023, making plenty of investors significantly richer. This month, it again became the world’s most valuable company, with a market cap of more than $3.5 trillion.
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Despite concerns that competition would bring it to heel or that the AI megatrend was inflating a bubble that would eventually burst, Nvidia has continued to deliver blowout results, and that pattern was on display once again in the fiscal 2025 third-quarter earnings report it delivered Wednesday.
Total revenue in the quarter jumped 94% year over year to $35.1 billion, topping the consensus estimate of $33.1 billion. The data center segment, where revenue jumped 112% to $30.8 billion, drove that growth, as demand for its graphics processing units (GPUs) continues to outstrip supply.
Profits also surged as the company continued to gain leverage on its operating expenses. On a generally accepted accounting principles (GAAP) basis, operating income jumped by 110% to $21.9 billion, and adjusted earnings per share surged from $0.40 to $0.81, ahead of the consensus estimate of $0.75.
Never before in history has a company as big as Nvidia grown so fast. Remarkably, its 94% revenue growth was its slowest pace on a percentage basis in six quarters, but it’s sustaining blistering growth rates for much longer than analysts had expected. The amount of revenue in dollar terms that it’s adding each quarter is also increasing sequentially, so the real growth of the business is accelerating even as its percentage growth moderates.
Earlier this year, some analysts were questioning whether the level of dominance Nvidia has established in the AI chip sector was sustainable. Advanced Micro Devices and Intel have launched their own competing AI accelerators. However, they have struggled to make a dent in Nvidia’s dominant market share. AMD disappointed the market with its latest earnings report and announced layoffs earlier this month, while Intel began a massive restructuring after its stock hit a 20-year low.
At this point, the key constraint on Nvidia’s growth is on the supply side, as CEO Jensen Huang recently said demand for its latest GPUs, built using its new Blackwell architecture, is “insane.”
