Nvidia Stock Down On Weak Q4 Margin View, Despite Upbeat Q3

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(RTTNews) - Shares of Nvidia Corp. dropped around 3 percent in the extended trading on Wednesday after the AI chipmaker warned on weak gross margin in its fourth quarter, while revenues are projected to be significantly higher than last year on booming AI demand.

In its third quarter, the world's most valuable company by market capitalization reported a surge in profit, above the Street view, with strong growth in revenues. Sequentially, net profit grew 16 percent and revenues went up 17 percent.

Jensen Huang, founder and CEO of Nvidia, said, "The age of AI is in full steam, propelling a global shift to NVIDIA computing. Demand for Hopper and anticipation for Blackwell — in full production — are incredible as foundation model makers scale pretraining, post-training and inference. AI is transforming every industry, company and country. Enterprises are adopting agentic AI to revolutionize workflows. Industrial robotics investments are surging with breakthroughs in physical AI. And countries have awakened to the importance of developing their national AI and infrastructure."

Looking ahead to the fourth quarter, reported and adjusted gross margins are expected to be 73.0 percent and 73.5 percent, respectively, plus or minus 50 basis points. The prior year's reported gross margin was 76 percent and adjusted gross margin was 76.7 percent.

Revenue is expected to be $37.50 billion, plus or minus 2 percent for the quarter. Revenue was $22.10 billion in the same period last year.

Analysts on average expect the company to record revenues of $37.61 billion for the quarter, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Further, Nvidia said it will pay its next quarterly cash dividend of $0.01 per share on December 27, to all shareholders of record on December 5.

In its third quarter, the company's net income surged 109 percent to $19.31 billion from $9.243 billion a year ago. Earnings per share grew 111 percent to $0.78 from $0.37 a year ago.

Adjusted net income was $20.01 billion or $0.81 per share, compared to prior year's $10.02 billion or $0.40 per share. Analysts had expected the company to earn $0.75 per share.

Gross margin for the quarter improved to 74.6 percent from last year's 74.0 percent.

The company's revenue for the quarter surged 93.6 percent to $35.082 billion from $18.120 billion last year.

Data Center revenue of $30.8 billion, grew 112 percent from a year ago, and Gaming revenues climbed 15 percent to $3.3 billion. In the quarter, Professional Visualization revenue increased 17 percent, and Automotive and Robotics revenue surged 72 percent from a year ago.

On the Nasdaq, Nvidia shares closed Wednesday's regular trading at $145.89, down 0.76 percent. In the extended trading, the shares dropped 2.5 percent to $142.25.

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