Good morning to everyone especially the Nvidia team, you guys killed it this quarter.

It’s Evan (StockMKTNewz) and Gav (WOLF_Financial) here with another special issue of Finance Visualized … In this edition, we’re covering Nvidia’s Q3 earnings.

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And with that let’s get right into the earnings.

Nvidia $NVDA reported headline numbers detailing:

• EPS of $4.02 beating expectations of $3.39 (Beat by 18.6%)

• Revenue of $18.1B beating expectations of $16.1B (Beat by 12.4%)

Here’s how those numbers compare to what they’ve reported every Q3 since Nvidia went public in January of 1999.

Q3 REVENUE HISTORY

Nvidia’s Q3 Revenue has grown at a Compound Annual Growth Rate (CAGR) of 24.3% from its IPO.

Q3 NET INCOME HISTORY

Nvidia’s Q3 Net Income has grown at a Compound Annual Growth Rate (CAGR) of 32.4% from its IPO.

Here’s how Nvidia’s major segments did compared to analyst expectations:

• Data Center: Revenue of $14.51B beating expectations of $12.82B

• Gaming: Revenue of $2.86B beating expectations of $2.7B

Nvidia is currently the only player in the AI race

Here’s how Nvidia’s other smaller segments (Professional Visualization and Automotive) did:

Adjusted Gross Margin: Came in at 75% above expectations of 72.5%

Nvidia guided to Revenue of $20B +/- 2% for next quarter above analyst expectations of $17.9B.

China: Nvidia said it expects sales in China to significantly decline in Q4 (China sales have made up ~20-25% of data center revenue over the last couple of quarters). Nvidia said the sales will be offset by sales in other regions.

When asked on the earnings call Nvidia’s CFO said “With the absence of China for our outlook for Q4, sure, there could have been some things that we are not supply-constrained that we could have sold” and “So could our guidance have been a little higher in our Q4? Yes.”

Fun Fact: The word "AI" was said 159 times on Nvidia's Q3 earnings call up from 104 in Q2

China: Nvidia announced it’s in the early stages of potentially launching new AI chips for China that will comply with US restrictions. Nvidia is an important market for them in the long term and the market is very focused on this … This definitely has the potential to move the stock.

Competition: There’s a lot of talk about the competition coming. AMD is starting to launch its MI300, Microsoft announced new chips for in-house use, and there are many more examples. None of them are expected in Q4 or even Q1. Q2 2024 is the earliest expected release, but make sure you keep an eye on them. This is 100% Nvidia’s market but we could be in the very early stages of change.

Expectations: Can Nvidia do it again? For the last couple of quarters, Nvidia hasn’t just beat expectations, they’ve destroyed them. For Nvidia stock to keep trading at its current level, they have to keep doing that. I wouldn’t bet against them doing the same thing in Q4 but any slight miss will likely punish the stock. CEO Jensen Huang remains bullish on data center growth stating “[We] absolutely believe the Data Center can grow through 2025” and the market believes him. Analysts remain bullish on the name with many of them raising price targets this morning.

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Gav + Evan