[UPDATE] Nvidia Clears the Bar With a $96 Billion Quarter

Nvidia had set the market a test, and it cleared the bar with room to spare. The company reported record revenue of $96.2 billion for the quarter ending in July, up 106 percent from a year earlier and 18 percent from the previous three months. Wall Street had penciled in something closer to $91 billion. When we previewed the report, the open question was whether the numbers could keep pace with the story investors have built around them. For this quarter, they did.

Almost all of that money came from one place. Data center revenue reached $89.0 billion, up 117 percent year over year, as cloud providers and governments kept buying Nvidia's chips faster than the company could ship them. Gross margins held at 75 percent, a level most hardware makers never come close to.

The guidance mattered more than the quarter

The figure that moved the market was not the past quarter but the next one. Nvidia told investors to expect roughly $108 billion in revenue for the current period, comfortably above forecasts. That outlook assumes no data center compute revenue from China at all, a sign of how completely the company has written off a market that once mattered to it. Chief executive Jensen Huang went further on the earnings call, telling analysts he expects revenue to grow about 70 percent in the following fiscal year.

Markets had been nervous going in. AI stocks wobbled in the days before the report, with investors worried that a single miss might puncture the whole trade. Instead the beat sent Nvidia shares up more than 7 percent the next day and carried the rest of the sector with it. Broadcom, Micron and Marvell all rallied, and the Nasdaq closed 1.6 percent higher.

The questions that did not go away

A strong quarter does not settle the harder debates. Much of Nvidia's growth now flows through a tight circle of customers and partners the company also invests in, an arrangement critics call circular financing. Nvidia has warned separately that memory shortages are pushing up the price of its AI servers, which could slow the very buildout it depends on. And a business where one segment supplies most of the revenue is, by definition, exposed if that spending cools. For now it has not cooled. Nvidia's numbers are the clearest evidence yet that the AI infrastructure boom is still accelerating.