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There was a lot to like about Nvidia’s (NVDA) third-quarter results after market hours on Tuesday including records in total revenue and Data Center sales. 

Still, Nvidia shares were down roughly -4% in this morning's trading session with some profit taking on the table and perhaps even loftier expectations after NVDA hit 52-week highs of $505 a share on Monday. 

To that point, Nvidia’s stock has soared over +200% this year as the company has proven to be the top dog as it relates to artificial intelligence (AI) chips' ahead of AMD (AMD) and other semiconductor peers.

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Q3 Review: Nvidia’s Q3 report was much anticipated as popular demand for its AI-powered H100 chips has accelerated the company’s growth to new heights.

This was reconfirmed with total sales for the third quarter skyrocketing 206% year over year to a record $18.12 billion and 12% above estimates of $16.19 billion. Third quarter sales were also up 34% from Q2 marking stellar sequential growth. Furthermore, with Nvidia’s AI chips being geared to optimize and accelerate data centers the company’s DATA Center revenue came in at a record $14.51 billion and catapulted 279% from the prior-year quarter while increasing 41% sequentially.

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Even Better, Q3 earnings of $4.02 a share beat the Zacks Consensus by 19% and skyrocketed from $0.58 per share a year ago while rising 49% sequentially. Nvidia has now surpassed earnings expectations for four straight quarters posting an average earnings surprise of 19%.

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Revenue Guidance & Product Outlook 

For the fourth quarter, Nvidia expects revenue to be $20 billion plus or minus 2% which was above many analyst expectations and the current Zacks Consensus of $17.85 billion. This would more than triple Q4 sales of $6.05 billion last year and mark another quarter of exceptional sequential growth as well.

In regards to product outlook, Nvidia still expects its superior H200 Tensor Core GPU chip to be available in the second quarter of next year which is expected to keep the company ahead of AMD’s MI300 series chips. The H200 will be the first GPU (Graphic Processing Unit) with HBM3e memory, which Nvidia says is 50% faster than the current HBM3 and allows the new platform to run models 3.5X larger than the previous version while improving performance with a 3X faster memory bandwidth.

Bottom Line

Given the somewhat unbelievable success and impact that Nvidia’s H100 series chips are already having on artificial intelligence capabilities, it is quite possible that the company's rapid growth will continue. In correlation with such, Nvidia continues to boast a Zacks Rank #1 (Strong Buy).

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