Let's talk about Nvidia earnings …
As we've discussed for much of the past two years, data center revenue has been telling a very clear story: There has been a manufacturing capacity issue.
We've looked at this drumbeat of about $4 billion in revenue growth, quarter-by-quarter, for much of the past two years (the red line) …
This quarterly growth ceiling led to a trend of decelerating year-over-year growth, which called into question valuation.
Is Nvidia worth 50+ times earnings if growth continues to slide?
Then there was Q2.
In the August report, not only was that $4 billion drumbeat disrupted — cut in half, to $2 billion — the "compute" component of data center revenue (which has been the growth story for Nvidia) actually contracted.
Certainly it's not worth 50x earnings after that, right?
However, we went into today's earnings with that premium valuation proving very durable.
And today, it was validated.
As we suspected, based on some very clear clues left by Jensen a few weeks ago, growth is back in data center.
They did $51 billion in data center revenue in Q3. It was the hottest quarter-over-quarter growth in seven quarters. And it was led by compute — the compute component grew by $10 billion, up 27% on the quarter.
So, the market should like the validation from this report. Growth in GPU deliveries/compute has returned.
And the focus now turns to the other big number that was revealed by Jensen a few weeks ago. In the earnings call today, management affirmed $500 billion of revenue "visibility" through the end of calendar year 2026.
That's half a trillion dollars of Nvidia's most advanced chips/systems to fulfill over the next five quarters– or $100 billion a quarter.
Can they fulfill it?
They say the parts are lined up, Blackwell is already shipping in volume, new U.S. wafer production is running, and partners are ready to build. So, they believe they can deliver.