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The world’s most valuable company just handed Wall Street a report card. And if the numbers are anything to go by, Nvidia didn’t just top the class. It showed up with a brand-new syllabus, a full scholarship, and a line of students begging to get in.
Nvidia reported its fiscal third-quarter earnings on Wednesday, and the results did exactly what investors were hoping for. They calmed nerves, lifted expectations, and reignited a debate that refuses to die: Is the booming AI market a passing bubble, or are we sitting in front of the next industrial revolution?
The Numbers: A Quarter That Spoke Loudly
Wall Street loves surprises, as long as they’re not the kind you find in an annual audit. And Nvidia delivered the kind everyone likes.
Here’s how the earnings stacked up against expectations from LSEG analysts:
- Earnings per share came in at $1.30, compared to the estimated $1.25.
- Revenue hit $57.01 billion, versus $54.92 billion expected.
To top it off, Nvidia said it expects about $65 billion in sales next quarter, far above the expected $61.66 billion. That boost alone sent shares up over 4 percent in extended trading.
But it’s not just about revenue. The company’s net income jumped 65 percent year over year, hitting $31.91 billion, compared to $19.31 billion a year ago. That’s a leap few companies outside of a gold rush ever witness.
And if AI is modern gold, Nvidia has become the only one selling shovels that everyone desperately wants.
The AI Boom: Is Nvidia Driving the Market, or Is the Market Driving Nvidia?
The upsurge in Nvidia’s value isn’t accidental. The world is in the middle of an AI arms race, and Nvidia is supplying weapons to every major player. Its GPUs (graphics processing units) power generative AI, large language models, search engines, recommendation systems, robotics, autonomous driving, supercomputing, and even AI-powered advertising systems.
Its customer list reads like a list of companies running the internet:
Microsoft, Amazon, Google, Oracle, Meta.
These companies are collectively expected to spend more than $380 billion this year on AI-related capital expenditures. And many of those billions are going straight into Nvidia’s pockets.
Nvidia CEO Jensen Huang summarized it succinctly on the earnings call: Cloud GPUs are sold out.
In simple terms, the biggest tech companies aren’t just planning for AI. They are stockpiling the hardware for a future that doesn’t exist yet. They’re hoarding GPUs the way oil refiners hoard crude before a war.
So, is that a bubble? Or a transformation?
That’s exactly where the debate gets interesting.
Why Investors Are Worried: The Bubble Argument
Let’s address the elephant everyone keeps pointing at. In every tech cycle, there is always a moment when growth looks unstoppable. That’s usually the moment when someone gets nervous.
And right now, skeptics are focused on a few concerns:
1. Concentration Risk
Just four customers accounted for 61 percent of Nvidia’s sales this quarter. That’s up from 56 percent last quarter. This level of dependency can be a problem if even one customer slows spending.
2. Circular Financing
Nvidia has begun investing billions into AI startups who also happen to be its customers. Imagine giving someone money to buy your product, so they can build something that requires more of your product. Some analysts say this looks less like innovation, and more like a circle where everyone is inflating each other’s valuations.
3. Rising Hyperscaler Debt
Investors worry that companies like Microsoft and Amazon are using creative accounting to justify massive AI spending. Extending the depreciable life of chips or hardware can make books look better than reality.
4. Renting Back Their Own Chips
Nvidia spent $26 billion renting back its own chips from customers who couldn’t rent them out. This sounds odd because a seller usually doesn’t become a tenant in their own house. But Nvidia says it’s doing this to ensure that GPUs are fully utilized, instead of lying idle.
Together, these concerns whisper one question: What if this massive buildout doesn’t translate into a profitable future?
That’s the bubble fear.
Why Nvidia Thinks the Bubble Talk Is Rubbish
Huang didn’t hesitate to address the speculation. His response was simple: what’s happening isn’t hype, it’s infrastructure. And this infrastructure isn’t just about ChatGPT or image generators. It’s about reinventing the computer itself.
He outlined three reasons why AI infrastructure isn’t a bubble:
One: Old Computation Is Becoming Obsolete
The world runs on computing systems built for CPUs, not GPUs. Huang argues that workloads like advertising recommendations, search algorithms, medical data analysis, or engineering simulations are moving to GPUs. It’s like shifting from typewriters to computers, not upgrading a keyboard.
Two: Entirely New Applications Are Coming
AI isn’t just improving existing tools. It will create industries we can’t price yet. That’s how the internet worked. No one valued social media in the year 2000. Today, those companies drive stock markets.
Three: Agentic AI Will Need Even More Compute
Agentic AI refers to systems that reason, plan, and act with minimal human input. Think of AI that negotiates freight deals for e-commerce, or software that writes, tests, and executes code autonomously. That future doesn’t just need computation. It needs unprecedented computation.
If that future happens even halfway, Nvidia isn’t selling tools for a bubble. It’s laying the bricks for every industry’s next factory.
Data Centers: Nvidia’s Real Engine
Nvidia’s biggest business isn’t GPUs for gaming anymore. It’s data centers.
- Data center revenue: $51.2 billion
- That’s a 66 percent jump year over year
- Of that, $43 billion came from compute GPUs
- $8.2 billion came from networking hardware
Sales are being driven by the company’s latest Blackwell family of chips, including the Blackwell Ultra. These are chips designed not just to compute faster, but to cluster thousands of GPUs into a system that works like a single massive computer.
Just imagine trying to strap a million brains together so they can solve the same problem simultaneously. That networking architecture is Nvidia’s moat, not just its chips.
Other Segments: Still Growing, But No Longer the Main Story
Before AI turned it into a trillion-dollar superstar, Nvidia was a gaming chip company. That business still exists.
- Gaming revenue: $4.3 billion, up 30 percent
- Professional visualization: $760 million, up 56 percent
- Automotive and robotics: $592 million, up 32 percent
Most interesting is robotics. Nvidia is betting big on machines that perceive, process, and act on data autonomously. Think warehouse robots, delivery bots, and autonomous cars.
These may be Nvidia’s future long-term bets. But right now, they’re side hustles next to the data center empire.
The China Challenge
There’s one pothole on Nvidia’s perfect highway. China.
Due to US export restrictions, Nvidia cannot ship its most advanced chips to mainland China. Nvidia attempted to serve the market through a downgraded H20 chip. But geopolitical tension crushed demand.
Sales in China amounted to just $50 million, and the company openly admitted it was disappointed. Meanwhile, Chinese competitors are trying to fill the vacuum, creating a more competitive landscape.
It’s the first meaningful threat to Nvidia’s dominance.
The Verdict: Are We in a Bubble?
If you listen to skeptics, the AI boom is one giant balloon tied to debt, hype, and uncertain returns. If you listen to Nvidia, we’re barely building the roads required for the AI era.
Who’s right?
Maybe both.
Tech history shows that early infrastructure spending always looks excessive before it becomes essential. Railroads were overbuilt. Telecom towers seemed unnecessary in the 90s. The internet bubble burst, but it left the foundations for today’s trillion-dollar tech economy.
AI will likely follow the same pattern. The bubble isn’t in whether AI matters. It’s in which companies survive long enough to matter.
But if there’s one constant in every infrastructure revolution, it’s this: the companies selling tools to everyone rarely lose.
And right now, Nvidia isn’t just selling shovels in a gold rush. It’s selling the land, renting the mines, funding the miners, and building trains to ship the gold.
That’s a different kind of business altogether.
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