How Did Nvidia and Walmart Beat Expectations?

TL;DR

Nvidia exceeded Wall Street’s third-quarter expectations with revenue rising 62% to $57 billion and projected current-quarter revenue of about $65 billion. Its results lifted technology stocks globally, while investors also watched Walmart’s third-quarter report, a delayed September jobs report, Federal Reserve commentary, and Bitcoin’s decline for signals about consumer health, economic weakness, and possible interest-rate cuts.

Transcript

Hello and welcome to morning brief market sunrise. I'm Ramzan Karali live from Yahoo Finance Studios in London. It's Thursday 20th November. Coming up on the show, the Nvidia effect. Its earnings have given tech stocks a supercharge. Investor focus now turns to the latest jobs report. Will it give the green light for a rate cut? and I'll bring you ... Read More

Key Insights

• Nvidia’s third-quarter revenue was $57 billion, representing 62% growth and exceeding Wall Street’s expectations. The company also projected approximately $65 billion in current-quarter revenue, which was $3 billion higher than analysts had estimated before the report.
• Nvidia’s earnings strengthened technology stocks beyond the company itself. Its premarket share-price increase helped lift other semiconductor and technology names in the United States and international markets, illustrating how Nvidia’s results influenced sentiment across the broader AI investment ecosystem.
• The AI investment cycle may require 18–24 months before newly developed data centers begin producing meaningful revenue. Chris Batti said many providers started building facilities about two years earlier, suggesting that some commercial returns could begin appearing, while revenue associated with Blackwell may require more time.
• Blackwell demand was described as exceptionally strong, and energy efficiency was identified as an important customer benefit. Lower energy requirements could help users improve operating efficiency and control costs, supporting continued demand if Nvidia can meet the required level of chip supply.
• China represents potential additional demand rather than a necessary part of Nvidia’s presented growth outlook. Batti argued that permission from the United States to resume eligible sales would give Nvidia access to another large market and provide an added benefit for the company and its investors.
• Falling interest rates generally support technology investments, but the timing of another Federal Reserve reduction remained uncertain. Batti did not expect an immediate cut because policymakers lacked information, although he believed a longer-term movement toward lower rates could benefit investors and semiconductor companies.
• Nvidia’s historical post-earnings performance favored longer holding periods over short-term trading. Across 40 reports spanning 10 years, the median return was 14% after one quarter, while positive outcomes occurred 77% of the time after one quarter and 83% after one year.
• Bitcoin’s decline reflected weakening support from expected Federal Reserve rate cuts and institutional adoption. It traded as low as $88,552, its weakest level in seven months, while total cryptocurrency market capitalization fell from approximately $4.3 trillion on October 6 to around $3.2 trillion.

Questions & Answers

Q: How did Nvidia’s third-quarter earnings beat expectations?

Nvidia reported third-quarter revenue of $57 billion, an increase of 62%, as sales of chips used in the AI expansion grew faster than Wall Street expected. The company also forecast approximately $65 billion in revenue for the current quarter. That projection exceeded Wall Street’s estimate by $3 billion and sent Nvidia shares higher in premarket trading.

Q: Why did Nvidia’s earnings lift other technology stocks?

Nvidia’s results suggested that demand for AI computing infrastructure remained strong despite recent concerns about technology valuations and an AI bubble. Because major technology companies and semiconductor manufacturers participate in the same investment cycle, Nvidia’s better-than-expected sales and forecast improved sentiment across the sector. Technology stocks rose in the United States and other global markets after the report.

Q: When could AI data-center investments begin producing revenue?

Chris Batti estimated that the typical cycle from beginning data-center development to seeing revenue is approximately 18–24 months. Many providers began their projects about two years earlier, so some revenue could start emerging around the period discussed. He cautioned that returns connected specifically to Blackwell may take longer, but said broader AI-related revenue was approaching.

Q: Why could demand for Nvidia’s Blackwell chips continue?

Blackwell chips offer customers an energy-efficiency benefit in addition to their computing capabilities. According to the discussion, this efficiency can help users reduce costs and improve operational performance, giving customers another reason to adopt the technology. Strong demand was described as being off the charts, although Nvidia’s ability to maintain adequate supply remained an important consideration.

Q: How important are potential Nvidia chip sales to China?

Potential sales to China were characterized as an additional opportunity rather than the central basis of Nvidia’s outlook. If the United States permits those transactions, Nvidia could gain access to another large group of active chip users. Chris Batti said this would be additive for the company and its investors, while Jensen Huang indicated he was not overly concerned about current China sales.

Q: What did Nvidia’s historical earnings performance suggest for investors?

Historical results favored longer holding periods rather than short-term earnings trades. Across 40 earnings reports over 10 years, Nvidia’s median return was 2% after one day, 4% after one week, 2% after one month, and 14% after one quarter. Positive-return rates reached 77% after one quarter and 83% after one year.

Q: What economic data could influence the next Federal Reserve decision?

The delayed September jobs report was expected to provide evidence about labor-market strength and the possibility of a December rate cut. The forecast called for 50,000 added nonfarm payrolls, unemployment holding at 4.3%, and monthly hourly-wage growth of 0.3%. Richmond Fed President Tom Barkin had also warned that the labor market might be weaker than available data indicated.

Q: Why did Bitcoin fall to a seven-month low?

Bitcoin fell as low as $88,552 after expectations for Federal Reserve rate cuts and growing institutional adoption lost momentum. Those factors had previously supported its rise to just above $126,000. The broader cryptocurrency market also contracted, with total capitalization declining from approximately $4.3 trillion on October 6 to around $3.2 trillion during the period discussed.

Summary & Key Takeaways

• Nvidia reported third-quarter revenue of $57 billion, a 62% increase, while forecasting approximately $65 billion for the current quarter. That outlook was $3 billion above Wall Street’s estimate, pushing Nvidia shares higher in premarket trading and supporting technology and semiconductor stocks across global markets.

• Nvidia’s outlook was supported by strong demand for Blackwell chips, which were described as more energy efficient for customers. Investment chief Chris Batti said AI infrastructure spending may begin generating revenue after an estimated 18–24 month data-center development cycle, although Blackwell-related returns could take longer to appear.

• Investors also monitored Walmart and other retailers, the delayed September jobs report, and Federal Reserve commentary. Forecasts called for 50,000 added nonfarm payrolls, 4.3% unemployment, and 0.3% monthly wage growth. Meanwhile, Bitcoin briefly fell to $88,552 as expectations for rate cuts and institutional cryptocurrency adoption weakened.