NVIDIA (NVDA) delivered the goods this week with big Q3 beats and higher views of Q4.

For Q3, NVIDIA reported non-GAAP earnings of $4.02 per share, which beat the Zacks Consensus Estimate by nearly 20%.

Moreover, the reported figure soared a whopping 593% year-over-year while increasing 49% sequentially. The robust increase in earnings was mainly driven by higher revenues and improvement in gross margin.

Revenues more than tripled on a year-over-year basis and climbed 34% sequentially to $18.12 billion.

The robust growth in the top line was mainly driven by record sales in the Data Center end market and recovery across the Gaming and Professional Visualization end markets due to the normalization of channel inventory.

Datacenter was +280% at $14.5B!

The top line also beat the consensus projection of $16.19 billion by 12%.

The Path to $100 Billion in Revenues

You can review my June and September projections for NVIDIA to hit $100 billion in annual revenues in this October report. Here’s an excerpt…

Jensen Huang said this: “The world has something along the lines of about a trillion dollars’ worth of data centers installed in the cloud and enterprise. And that trillion dollars of data centers is in the process of transitioning into accelerated computing and generative AI.”

I think this translates into NVIDIA hitting $100 billion per year in revenue much sooner than my 2026 projection in June. So don’t miss your chance to buy NVDA under $450 again. I’m pretty sure you won’t see it below $400 ever again.

(end of excerpt from 10/6 report)

Investors got a big gift in late October with a market dive giving you chances to buy NVDA at $400!

And if anyone thought the party was going to stop, Jensen & Co. offered revenue guidance for the current quarter that is projected to cross $20 billion, over $2B higher than estimates.

The only blemish was Jensen’s warning about export restrictions on sales to China. With 20-25% of revenues coming from China, it’s a real concern.

As we would expect when it comes to the big unknown of government intervention, Jensen doesn’t have good visibility on that horizon.

But many analysts believe him when he says that NVIDIA has work-arounds where they can still sell technology to China.

In the bigger picture, a lot of other nations could, and probably will, make up for any loss of sales to China.

The Bigger Picture

Jensen spoke Tuesday night of the global transformation to “AI factories.” We’ve been watching this trend ever since BMW hired him in 2018 to build the future of intelligent manufacturing automation with AI-driven robotics design and application.

But this is also a nod to the “factory of data” that must be managed for all kinds of enterprises — including Jensen’s favorite future application: biology, medicine, and the healthcare benefits for people.

On Wednesday morning, BofA Semi analyst Vivek Arya appeared on CNBC’s Squawk Box to explain why he raised his PT on NVDA to a Street high of $700.

He highlighted 3 big trends for NVIDIA architectures that you’ve heard me talk about for some time…

1. We are in a multi-decade transformation for AI, LLMs, and GenAI. This means enterprise datacenters must be revamped aggressively over the next several years to “accelerated” GPU-based computing. NVIDIA is the clear leader here.

2. NVIDIA is adding richer product mixes all the time, including CPU-integrated architectures and new system/software platforms to enhance CUDA.

3. Nations want “AI sovereignty” and by that he means they want to build their own platforms for advanced computing to manage their data and technology. Arya says NVIDIA has “the best turn-key solution” to do that.

More countries are experiencing the “big-data deluge” and the solutions are LLMs and GenAI.

Nations Need NVIDIA

This immediately made me think of my State of Threat cybersecurity report from last month. While the “bad actors” will be ever present, there are many more nations looking for constructive uses of AI to enhance their economies and technology infrastructures.

I also saw Aaron Rakers from Wells Fargo, who raised his PT to $675, talk about his long-term earnings outlook based on industry domination in datacenter and AI software. He sees NVIDIA investors continuing to pay 30X EPS when earnings go above $20 next year.

Even as NVIDIA is able to turn the leverage and margin trim tabs, I still focus on the growth of revenues and how they are able to command a price/sales multiple of 15X which will get us above a $1.5 trillion market cap very soon in a $20 trillion TAM (total addressable market).

This is how NVDA has “grown into its valuation” as it inevitably approaches $100 billion in sales next year with 60%+ topline and bottomline growth!

And we are barely talking yet about the explosive growth markets of self-driving cars and all kinds of robotics after the success of the BMW buildout.

By the way, if you haven’t explored the brains behind NVDA GPU chip design, check out Cadence Design Systems (CDNS) as a major NVIDIA partner in AI simulation capabilities.

— Kevin Cook

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