Yahoo Finance: Nvidia's "Off the Charts" Demand vs. Market Reality

Title: Nvidia's $500 Billion Promise: Reality or AI-Fueled Mirage?

Nvidia (NVDA) just dropped its Q3 numbers, and the market's acting like it found the Golden Ticket. EPS of $1.30 on revenue of $57.01 billion—beating expectations of $1.26 and $55.2 billion, respectively. The stock jumped 5% after hours, dragging AMD, Micron, and even the megacaps along for the ride. But let's pump the brakes for a second and actually look at the numbers.

Data Centers vs. Gaming: A Tale of Two Nvidias

The headline is all about AI, and rightfully so. Nvidia's data center business hauled in $51.2 billion, handily exceeding the $49.3 billion estimate. That’s the engine driving this train. Gaming, however, came in a bit short at $4.3 billion (versus $4.4 billion expected). This discrepancy is key. Nvidia is increasingly a data center play, not a gaming one.

CEO Jensen Huang is out there saying Blackwell sales are "off the charts" and cloud GPUs are "sold out." That’s great PR, but CFO Colette Kress gave us the real headline: visibility to $500 billion in Blackwell and Rubin revenue from the start of 2025 through the end of calendar year 2026. That's the number everyone's fixating on.

But here's the question no one seems to be asking: what's the basis for that $500 billion projection? Is it signed contracts? Projected demand based on current AI model training needs? Or is it simply a best-case scenario based on optimistic assumptions? (Details on the methodology remain notably scarce in the earnings call transcript).

Bernstein's Stacy Rasgon called it a "nice, solid beat and raise," while CFRA's Angelo Zino believes supply constraints will persist through 2026, potentially well into 2027. Fine. But even Zino acknowledges the company is "essentially completely being driven by data centers." In other words, all eggs in one AI basket.

The AI "Bubble" Debate: Huang's Rebuttal

Huang, predictably, rebutted claims of an AI "bubble," stating Nvidia is positioned for success in "every phase of AI, from pre-training and post-training to inference." He would say that, wouldn’t he? It's his job to sell the narrative. But let's think about this logically.

The AI boom is undeniably real, but its sustainability is the question. Are companies truly seeing a return on investment from these massive AI deployments, or are they simply throwing money at the problem because everyone else is? And what happens when (not if) the AI models become more efficient and require less raw computing power? Will demand for Nvidia's GPUs remain at these feverish levels?

Intelligent Alpha's Doug Clinton is watching that "$500 billion number" closely. Goldman Sachs' Jim Schneider doesn't "think we're going to see many cracks this quarter." But what about next quarter? Or the quarter after that? The market seems to be pricing in perfect execution and unlimited demand for the next two years. That's a bold assumption, especially in the tech world.

I've looked at hundreds of these filings, and this level of unwavering optimism always makes me nervous. It reminds me of the dot-com boom—a lot of hype, a lot of money, and a lot of companies that ultimately went bust.

Beyond Nvidia: A Mixed Bag for Retail

While Nvidia is stealing the spotlight, let's not ignore the other earnings reports. The retail sector, in particular, presents a mixed picture. TJX Companies (TJX) crushed expectations, reporting profits of $1.28 per share on net sales of $15.1 billion. They even lifted their full-year guidance. TJX CEO Ernie Herrman said the fourth quarter is off to a strong start.

Home Depot (HD), on the other hand, expects same-store sales for the full year to be "slightly positive," a downgrade from their previous 1% increase forecast. Adjusted earnings per share missed forecasts, coming in at $3.74 (analysts expected $3.84). Home Depot CEO Ted Decker blamed the miss on a lack of storms in the third quarter. (Apparently, people buy more stuff at Home Depot when it's raining).

Target (TGT) slashed its full-year profit guidance and provided a cautious outlook for the holiday season. Sales dropped in discretionary departments. Target chief commercial officer Rick Gomez noted that "Guests are choiceful, stretching budgets and prioritizing value."

The common thread? Consumers are still spending, but they're being more careful about where they spend. They're prioritizing needs over wants, and they're looking for deals. In other words, the "revenge spending" of the post-pandemic era is officially over.

Nvidia's Hype Train: All Aboard?