Chip designer NVIDIA Corporation delivered results mostly in line with analyst estimates for its third quarter, as it guided fourth quarter margins lower than the previous quarter's and shared that its Blackwell AI GPUs will continue to face supply constraints for most of the next fiscal year. NVIDIA's earnings report for its fiscal year 2025's third quarter saw the firm beat analyst revenue and earnings estimates.
Heading into today's release, analysts were expecting NVIDIA to rake in $33 billion in revenue and $18.4 billion in net income. NVIDIA surpassed both of these by earning $35 billion in revenue and $20 billion in non-GAAP profit. Additionally, the firm also met analyst estimates for its gross margin, which sat at 75%, to remain flat annually and record a 70 basis point sequential drop.
NVIDIA Shares Remain Muted Following Another Set Of Tepid Earnings Results Compared To Estimates
NVIDIA's third-quarter results were identical to the second quarter's reports when it comes to the top and bottom line beat and the subsequent share price movement. After the firm posted its Q2 results, despite the fact that it had beaten analyst revenue, earnings and guidance estimates, its shares nevertheless slipped in aftermarket trading. This drop was attributed to weak margins, and with the third quarter results, a similar story is playing out.
However, NVIDIA's post-third-quarter earnings share price drop is more muted. After its results were released, and even though the firm beat analyst estimates for major metrics, the shares dropped by 3.5% before paring back the loss to 1.33%. NVIDIA's gross margin of 75% for the quarter also met analyst estimates, but it reflected the growing costs of launching new products as it remained flat at 75% annually and was lower than the previous quarter's 75.7%.
The post-earnings share price drop appears to be attributed to a tepid guidance beat. Analysts had expected NVIDIA to guide $37.09 billion in revenue, and while NVIDIA's $37.5 billion in guidance did beat the estimates, it was weaker than many would have hoped. However, after recovering its losses to 1.33%, the stock continued its upward momentum and further pared back the losses to 0.75% to indicate that investors were coming to terms with growth's inevitable slowdown at the most valuable company in the world.
NVIDIA's second-quarter earnings were also marked by worries about its latest Blackwell AI GPUs. During her remarks as part of the Q3 earnings, CFO Collette Kress mentioned Blackwell and the older Hopper GPUs. She shared that NVIDIA "completed a successful mask change for Blackwell, our next Data Center architecture, that improved production yields."
Kress added that "Blackwell production shipments are scheduled to begin in the fourth quarter of fiscal 2025 and will continue to ramp into fiscal 2026," and NVIDIA would be "shipping both Hopper and Blackwell systems in the fourth quarter of fiscal 2025 and beyond." However, the CFO also cautioned that Hopper and Blackwell are facing supply constraints. According to her, "Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026."
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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