Nvidia (NASDAQ: NVDA) once again showed that it is the company most benefiting from the artificial intelligence (AI) infrastructure build-out, as it continued to show astronomical revenue growth in fiscal 2025's Q3 (ended Oct. 27, 2024). And in a truly incredible feat (despite its huge size), the company generated more in profits this quarter than it generated in revenue in the year-ago quarter. That is just something you do not see often with large companies.
While the stock price did not soar on this latest news, it has still nearly tripled year to date as of this writing. With another great quarter in the books, let's take a closer look at Nvidia's most recent results to see if the stock's momentum can continue.
Surging revenue growth
While Nvidia's revenue growth continued to decelerate from the unsustainable levels it saw earlier this year, the chipmaker was still able to see its fiscal 2025 Q3 revenue surge 94% to $35.1 billion. The company saw 262% revenue growth in fiscal Q1 and 122% in fiscal Q2. Adjusted earnings per share (EPS) more than doubled to $0.81. Those results easily topped analyst expectations for adjusted EPS of $0.75 on revenue of $33.2 billion.
Its data center business once again led the way, with revenue soaring 112% year over year to $30.8 billion. The growth was powered by demand for its Hopper graphics processing unit (GPU) computing platform, particularly its H200 Hopper chip. During the quarter, the company also shipped 13,000 samples of chips based on its next-generation Blackwell GPU architecture. The company said it is seeing significant inference revenue growth, and that it has the largest inference platform.
Cloud service providers made up about half of Nvidia's data center revenue in the quarter. However, it said enterprise AI is becoming the next big wave of AI, and that thousands of companies are using Nvidia NIM, its set of accelerated inference microservices that organizations can use to run large language models (LLMs) on its GPUs. It also said that industrial and robotic AI growth is beginning to accelerate.
Nvidia's other segments also showed solid growth, although they are now much smaller than its data center business. Gaming revenue jumped 15% to $3.3 billion, while professional visualization rose 17% to $486 million, and automotive and robotics revenue soared 72% to $449 million. The company continues to produce a prodigious amount of cash, with operating cash flow of $17.6 billion and free cash flow of $16.2 billion. Nvidia ended the quarter with net cash and marketable securities of $38.5 billion and $8.5 billion in debt.
Image source: Getty Images
Looking forward, Nvidia projected fiscal Q4 revenue to be around $37.5 billion, which would represent approximately 70% year-over-year growth. The growth will continue to be led by Hopper, as well as the ramp-up of its newest Blackwell GPU architecture. It said that demand for Blackwell greatly exceeds current supply, but that just Blackwell revenue should exceed its prior expectations by several billion dollars.
The company noted that the last generation of foundation models will end using about 100,000 Hopper GPUs, while the newest foundation models will start by using 100,000 Blackwell GPUs. It sees this as an indication of where growth is headed, while also noting that it has a large installed base, into which it will also scale its inference business.
Is it time to buy the stock?
Despite the stock nearly tripling this year, Nvidia's stock is not expensive. It currently trades at a forward price-to-earnings (P/E) of just over 34 times next year's analyst estimates, with a price/earnings-to-growth (PEG) ratio of 0.85. A PEG ratio of under 1 is typically viewed as undervalued, and growth stocks will often have multiples well above 1.
NVDA PE Ratio (Forward 1y) data by YCharts
Nvidia continues to produce outstanding growth, which probably could be even greater if not for supply constraints. Demand for its GPUs remains insatiable as companies race to build out their AI infrastructure.
Importantly, though, Nvidia is starting to see strong demand beyond cloud computing customers and among enterprise and industrial customers. It is also beginning to see a lot of demand for inference. While cloud computing companies will continue to need more and more computing power as they advance AI models, seeing strong growth beyond these areas is important for Nvidia going forward, so this is a good sign.
Given the strong continued demand for AI infrastructure and its inexpensive valuation, Nvidia continues to be an attractive stock for investors to consider buying.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,885!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of November 18, 2024
Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
