More important than strong financial reports, Goldman Sachs: NVIDIA's management answered three "key questions"

According to the latest financial report released by NVIDIA, the company's revenue for the third quarter reached $57 billion, far exceeding Wall Street's expectation of $55.4 billion. At the same time, the company's revenue guidance for the fourth quarter is $65 billion, also higher than the market estimate of $62.4 billion. Driven by impressive performance, NVIDIA's stock price rose over 5% in after-hours trading.

In response to this financial report, Goldman Sachs maintained a "Buy" rating on NVIDIA in its latest research report and raised the 12-month target price from $240 to $250. Goldman Sachs analysts pointed out that compared to the strong financial data, the management's responses to three key questions during the earnings call are more strategically significant.

These three questions cover the revenue outlook for data centers, the progress of the next-generation Rubin chip, and the GPU product lifecycle. The management's clear responses provide investors with important evidence regarding the company's long-term growth certainty. The report further noted that although investors had relatively fully anticipated this quarter's performance, the management's clear statements are expected to support the continuation of the stock price's upward momentum.

The financial report shows that NVIDIA expects the gross margin for the fourth quarter to rebound to 75%, returning to the target level previously set by management. Despite facing pressure from rising costs of HBM memory and other components, the company still believes that through product pricing optimization and cost control measures, it can maintain a gross margin of around 70% by 2026.

Based on a more optimistic outlook for revenue and gross margin, Goldman Sachs raised its earnings per share (EPS) expectations for NVIDIA over the next few years by an average of 12%. Additionally, Goldman Sachs provided its first earnings per share forecasts for the fiscal years 2028 to 2030, which are $15.60, $18.65, and $22.10, respectively. The research report pointed out that NVIDIA has a sustainable model advantage in the AI training application field compared to its peers, and its future performance still has significant upside potential.

Three Key Questions Received Clear Answers

Goldman Sachs analysts pointed out that NVIDIA's management provided clear responses to the three core questions most concerning to investors during this earnings call:

First, the company reaffirmed its expectation for data center product demand to exceed $500 billion in the fiscal year 2025/26, and noted that with the continuous influx of new customer orders, this scale still has further upward potential.

Second, the next-generation Rubin chip is scheduled to be launched in mid-2026, and is expected to contribute significantly to revenue in the second half of the same year. The clear announcement of this timeline effectively alleviated market concerns about the execution progress of the product roadmap.

Third, in response to concerns about the GPU product lifecycle, management provided strong evidence: the Ampere architecture GPU (A100), launched six years ago, is still operating under high load today, which indicates that AI-related GPU products not only have excellent durability, but their actual lifespan generally exceeds customers' original depreciation expectations. **

Data Center Business Drives Strong Growth

NVIDIA's data center computing business achieved revenue of $51.2 billion in the third quarter, a year-on-year increase of 56%. In terms of product structure, the new generation Blackwell Ultra (GB300) has accounted for two-thirds of the total shipments of the Blackwell series, while the GB200 contributed the remaining portion. Notably, the previous generation Hopper architecture products still generated $2 billion in revenue this quarter, demonstrating strong lifecycle resilience.

The data center networking business performed particularly well, with a year-on-year increase of 162% to $8.2 billion. This growth was primarily driven by strong demand for NVLink, Spectrum-X, and Infiniband solutions. Major customers such as Meta, Microsoft, Oracle, and xAI contributed significant incremental growth in this area.

Looking ahead, NVIDIA maintains its long-term outlook for the AI infrastructure market, expecting global annual spending to reach $3-4 trillion by 2030. The company has clearly stated its commitment to capturing a significant share of this vast market. Management also reiterated that the total confirmed customer demand for the Blackwell and Rubin generations of products in the computing and networking fields is expected to exceed $500 billion.