Nvidia (NVDA) delivered a highly anticipated earnings report, and the AI semiconductor leader lived up to expectations.
“These results and commentary should help steady the ship for the AI trade into the end of the year,” Jefferies analysts wrote in a Thursday note.
The company’s late-Wednesday announcement arrived at a critical moment for the broader AI-driven market rally. Over the past few weeks, debate around whether AI valuations have entered bubble territory has intensified, fueled by concerns over massive data-center investments, the durability of AI infrastructure, and uncertainty around commercial adoption.
Thursday’s market swings showed just how unresolved the conversation remains. The Nasdaq Composite surged more than 2% early in the day, only to reverse course and fall nearly 2% by afternoon. Nvidia shares followed a similar pattern—after climbing 5% in the morning, the stock later slipped almost 3%.
Still, Nvidia’s exceptional performance provided some reassurance to investors worried about overheating in the AI sector.
The company reported that quarterly revenue jumped 62% to $57 billion, with expectations for current-quarter sales to reach $65 billion. Margins also improved, and Nvidia projected gross margins would expand further to nearly 75% in the coming quarter.
“Bubbles are irrational, with prices rising despite weaker fundamentals. Nvidia’s numbers show that fundamentals are still strong,” said David Russell, Global Head of Market Strategy at TradeStation.
Executives also addressed long-standing questions about AI profitability, return on investment, and the useful life of AI infrastructure during the earnings call.
CEO Jensen Huang highlighted the broad scope of industries adopting Nvidia hardware, pointing to Meta’s (META) rising ad conversions as evidence that “transitioning to generative AI represents substantial revenue gains for hyperscalers.”
CFO Colette Kress also reassured investors about hardware longevity, stating, “Thanks to CUDA, the A100 GPUs we shipped six years ago are still running at full utilization today.”
Her remarks appeared to indirectly counter claims from hedge fund manager Michael Burry, who recently suggested that tech firms were extending the assumed lifespan of GPUs to downplay data-center costs.
Most analysts responded positively to the report.
“On these numbers, it is very hard to see how this stock does not keep moving higher from here,” UBS analysts wrote. “Ultimately, the AI infrastructure tide is still rising so fast that all boats will be lifted,” they added.
However, not everyone is convinced that the concerns fueling the AI bubble debate have been resolved.
“The AI bubble debate has never been about whether or not NVIDIA can sell chips,” said Julius Franck, co-founder of Vertus. “Their outstanding results do not address the elephant in the room: will the customers buying all this hardware ever make money from it?”
Others suggested that investor scrutiny may only increase from here.
“Many of the risks now worrying investors, like heavy spending and asset depreciation, are real,” noted TradeStation's Russell. “We may see continued weakness in the shares of companies taking on debt to build data centers, even as the boom continues.”