Nvidia shares climbed on Thursday as its latest financial results proved that demand for artificial intelligence remains robust, with the stock surging 7.2% in pre-market trading. The upbeat sentiment could finally break the chipmaker's four-quarter curse, during which its stock retreated on the first trading day following earnings even when results met or exceeded expectations.
The blockbuster report, which significantly surpassed Wall Street forecasts, has reignited optimism across the entire semiconductor landscape. Memory maker Micron Technology rose 4.5%, Marvell Technology gained 5.7%, Arm Holdings advanced 4.7%, Intel climbed 3%, and AMD edged up 1.7%. Newer AI cloud players also rallied, with Nebius up roughly 7.5% and CoreWeave about 6% in pre-market trading.
Chief Executive Officer Jensen Huang declared that the AI industry has "reached an inflection point," noting that the number of enterprises requiring massive GPU computing clusters has expanded dramatically. "Just last year, the entire compute expansion was driven by one AI lab. Now, a wave of new AI labs and startups are flourishing, multiple frontier AI institutions are scaling simultaneously, the open-source model ecosystem is thriving, and physical AI is beginning to materialize, with strong momentum across the US and globally," Huang said.
The company also demonstrated to investors that its customer base is diversifying beyond a handful of hyperscalers. Revenue from AI cloud, industrial, and enterprise clients reached $40.3 billion this quarter, a staggering 138% year-over-year increase.
Chief Financial Officer Colette Kress stated on Wednesday that revenue is expected to grow 70% in fiscal 2028, which spans February 2027 to January 2028. Huang, however, emphasized that actual market demand "far exceeds 70%," with product supply capacity being the only constraint. The company's primary foundry, TSMC, continues to face supply bottlenecks, while memory chips—a core component of Nvidia's systems—remain in tight supply, a shortage even Apple cannot escape.
Despite the overwhelmingly positive results, analysts on Thursday pointed to potential headwinds: supply chain limitations and the rise of custom silicon from AI labs like OpenAI and hyperscale cloud providers, which pose a growing challenge to Nvidia's near-monopoly in high-end AI chips.
Where to begin with the outlook
Huang noted that Nvidia has never before provided a full-year forecast this far in advance, but the significantly improved visibility across its supply chain now allows for long-term guidance. This outlook arrives amid lingering investor concerns over Big Tech capital expenditures, circular financing debates, and the actual returns on AI investments. Nvidia's confident stance on AI demand has helped assuage some of those worries.
"Nvidia's earnings show that the current valuation is not actually expensive, and the stock still has enormous upside potential," said Sidi Chaube, senior portfolio manager at Econopolis Wealth Management's Index Technology Fund, speaking on a European financial program.
The chip sector experienced a sharp selloff in July, sparking concerns about a potential correction. However, Nvidia's earnings have restored market confidence. "I remain bullish on Nvidia and the entire AI ecosystem. We won't realistically face growth slowdown risks until at least 2028," said Paul Meeks, technology research director at Free Capital Markets.
Adding to the positive momentum, The Information reported Wednesday, citing sources familiar with the matter, that Nvidia has reached an agreement to acquire open-source AI model platform Hugging Face for $12.9 billion. Business Insider had previously reported that Nvidia was in talks to buy the company. If the deal closes, the world's most popular open-source large-model sharing and development platform would fall under Nvidia's umbrella, further extending the chip giant's footprint in the software and model ecosystem.
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