Article Title: Nvidia Predicts Slowest Revenue Growth in Seven Quarters; Shares Drop

Written by: Max A. Cherney, Arsheeya Bajwa, Stephen Nellis

Nvidia, the world’s most highly valued company, projected its weakest revenue growth in seven quarters this Wednesday, falling short of the high expectations set by some shareholders.

The company, headquartered in Santa Clara, California, saw its shares tumble by 5% following the announcement of its results, though it managed to recover and limit the decline to 1.5% in after-hours trading. During the regular trading session, shares closed down by 0.8%.

Ahead of the results, anticipation was high, with Nvidia’s shares soaring over 20% in the two months prior and hitting an all-time intraday high on Monday. This year alone, the company’s stock has almost quadrupled and has escalated more than nine times over the past two years.

Currently, Nvidia is in the process of launching its potent Blackwell family of AI chips. The chips are expected to initially hamper the company’s gross margins but are predicted to improve over time.

The new chip line has been well received by Nvidia’s customers, and the company is set to surpass its initial sales projections of several billion dollars for the chips in the fourth quarter, Colette Kress, the CFO, informed analysts on a conference call on Wednesday.

When questioned about media reports of a high-end liquid-cooled server containing 72 of the new chips experiencing overheating during preliminary testing, CEO Jensen Huang assured that there were no problems and that clients like Microsoft, Oracle, and CoreWeave are integrating the systems.

Huang also confirmed to Reuters, “There are no issues with our Grace Blackwell liquid-cooled systems.” He added that the engineering is challenging because of the complex nature of the technology but assured that the company is in a good position.

The new chips will initially carry gross margins in the low 70% range, but this is expected to increase to the mid 70% range as production increases, according to Kress.

Nvidia anticipates a revenue of $37.5 billion, plus or minus 2%, for the fourth quarter, which is slightly higher than analysts’ average estimate of $37.09 billion.

Despite the impressive growth rate due to the high demand for the company’s chips used in complex AI systems, it represents a noticeable slowdown from previous quarters when Nvidia consistently reported sales that at least doubled.

Huang stated in the earnings release, “The age of AI is in full steam, propelling a global shift to NVIDIA computing.” He also mentioned the high demand for Hopper and the anticipation for Blackwell, their high-performing AI chips.

The company’s fourth-quarter forecast indicates a slowdown in revenue growth to approximately 69.5% from 94% in the third quarter.

Ryan Detrick, chief market strategist at Carson Group, noted that while the report was solid, it’s becoming increasingly difficult for Nvidia to consistently exceed investor expectations.

Though demand for Nvidia’s chips is high, supply chain issues have complicated the company’s ability to post significant revenue increases. One of the main constraints on chip supply has been the limited capacity for advanced manufacturing techniques at TSMC, the company’s manufacturing partner.

Ben Bajarin, CEO of Creative Strategies, believes that Nvidia’s quarterly growth rate will continue as the company will face supply chain constraints for most of 2025 due to demand outstripping supply.

The company reported third-quarter adjusted earnings of 81 cents per share, higher than the estimated 75 cents per share. Nvidia’s data-center segment, which accounts for most of the company’s revenue, grew by 112% to $30.77 billion in the quarter ending Oct. 27.

Nvidia’s sales are boosted by the ongoing spending on its chips by cloud companies as they expand data centers to handle the complex processing needs of generative AI.

The company also revealed that it had resolved a design flaw with its Blackwell chips by modifying the blueprints used by TSMC for their manufacture.

Analyst Bob O’Donnell of TECHnalysis Research commented that rumors of potential supply chain issues are undoubtedly causing concerns.

The company reported an adjusted gross margin of 75%.