Nvidia Stock Falls Despite Q3 Beat, Positive Commentary On Blackwell Demand: Retail Stays Upbeat

Nvidia Corp. ($NVDA), the frontrunner in the artificial intelligence (AI) race, reported fiscal year 2025 third-quarter results that exceeded expectations and issued an in-line guidance for the running quarter.

Key Nvidia Q3 Metrics: Santa Clara, California-based Nvidia’s quarterly non-GAAP earnings per share (EPS) came in at $0.81, up from the year-ago’s $0.40 and the consensus of $0.74.

Revenue nearly doubled year-on-year (YoY) to a record $35.08 billion, surpassing the consensus estimate of $33.13 billion. In late August, Nvidia guided revenue to $32.5 billion, plus or minus 2%, leaving a tight margin vs. expectations.

Sequentially, the top-line growth was 17%.

Jensen Huang, CEO of Nvidia said, "The age of AI is in full steam, propelling a global shift to NVIDIA computing."

"Demand for Hopper and anticipation for Blackwell — in full production — are incredible as foundation model makers scale pretraining, post-training and inference."

Third-quarter non-GAAP gross margin came in at 75%, flat with the year-ago quarter, but down 0.7 points from the second quarter.

Nvidia announced a quarterly dividend of $0.01 per share, payable on Dec. 27, to shareholders on record as of Dec. 5.

Segmental Performance: Nvidia’s data center revenue was a record $30.77 billion, or roughly 87.7% of the total revenue, thanks to 112% YoY growth and a 17% sequential increase. 

CFO Colette Kress said demand for Hopper computing platform for training and inferencing of large language models, recommendation engines, and generative AI applications drove the performance of the data center business. Cloud service providers accounted for 50% of the data center revenue.

The executive said Blackwell production shipments would begin in the fourth quarter and will continue to ramp into fiscal 2026. "Both Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026," she added.

The Gaming segment contributed $3.3 billion to total revenue, as it grew by 15% YoY and 14% sequentially. Professional visualization and automotive & robotics chipped in with contributions of $486 million and $449 million, respectively. 

Nvidia Outlook:  Nvidia guided fourth quarter revenue to $37.5 billion, plus or minus 2%. Analysts currently model fourth-quarter non-GAAP EPS of  $0.82 per share and revenue of $37.05 billion. 

Quarterly non-GAAP gross margin is estimated at 73.5%, plus or minus 50 basis points.

For the year, Wall Street forecasts non-GAAP EPS of $2.86 and revenue of $126.29 billion. 

The focus now shifts to the earnings call scheduled to be hosted by the management at 5 pm ET. Nvidia investors may seek clarity on the next-gen Blackwell AI chip ramp, especially after recent reports said it caused overheating at the clients’ end. 

Nvidia Stock: Nvidia shares ended Wednesday’s session down 0.76% at $145.89. It has rallied about 195% for the year-to-date period, outpacing the 11% gain for the iShares Semiconductor ETF ($SOXX).

The chipmaker is the third best-performing S&P 500 stock so far this year.

The average analysts’ price target for Nvidia stock is $165.18, according to TipRanks. This suggests there is still scope for over 13% upside potential.

On Wednesday, in after-hours trading, as of 4:59 pm ET, the stock fell 1.30% to $145.10.

Retail Sentiment: Nvidia was the top-trended stock on the Stocktwits platform and it was the most active ticker as well.

 NVDA sentiment and message volume November 20, 2024, after-market as of 4:59 pm ET | Source: Stocktwits

Notwithstanding the stock reaction, retail remained upbeat, with the sentiment meter showing an ‘extremely bullish’ mood, accompanied by ‘extremely high’ message volume.

Stocktwits users bullish on the stock lamented the after-hours drop and saw it as the handiwork of shorts.