Last week, Nvidia Corporation (NASDAQ: NVDA) issued its third quarter results, topping both sales and earnings estimates as well as posting a better-than-expected current quarter guidance as its end-customers, including Microsoft Corporation (NASDAQ: MSFT), Open AI and Oracle Corporation (NYSE: ORCL), have started receiving its next-generation AI chip, the mighty Blackwell, that is now in full production.

Third Quarter Highlights

For the quarter ended on October 27th, Nvidia reported its revenue surged 94% YoY to $35.08 billion, surpassing LSEG's estimate of $33.16 billion. But, this is a quarterly slowdown as sales rose 122%, 262%, and 265% during previous quarters respectively. The date center business that is at the heart of the AI hype brought in $30.8 billion with sales rising 112% YoY and surpassing StreetAccount's estimate of $28.82 billion. But not all of that revenue is made of chips that power AI development as $3.1 billion of that sales figure was brought in by networking parts. Gaming business brought $3.28 billion to the revenue table. While automotive and professional visualization businesses remain much smaller, automotive sales grew 72% YoY to $449 million while the later reported 17% YoY growth, bringing in sales of $486 million.

Net income more than doubled from last year's comparable quarter as it amounted to $19.3 billion. While net income jumped from last year's 37 cents per share to 70 cents per share, adjusted earnings per share amounted to 81 cents, also topping LSEG's estimate of 75 cents. Due to selling more chips, gross margin expanded to 73.5%.

Fourth Quarter Outlook

Nvidia guided for current quarter sales of about $37.5 billion plus or minus 2%. Outlook implies YoY growth of about 70%, which is a slowdown from last year's comparable quarter when growth amounted to 265%.

Nvidia's AI dominance remains intact.

It's a well-known fact that Nvidia is a primary beneficiary of the ongoing AI hype, with shares nearly tripling year to date. Blackwell shipments are in for a ramp up next year, but already in the current quarter, Nvidia is in "several billion dollars" of Blackwell revenue. Demand for Blackwell is expected to exceed supply for several quarters in the next fiscal year. Now for how long can Nvidia's AI dominance continue to soar is a different question only time is able to answer.

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