Commentary by etoro analyst for Romania, Bogdan Maioreanu

AI Boom Boosts Nvidia’s Sales

Nvidia has made extraordinary growth look routine, and its earnings report is eagerly awaited each quarter to see if this trend continues. This quarter it did. Revenue more than doubled year-on-year to US$96 billion, including US$89 billion from data centres, while its US$108 billion October-quarter outlook exceeded expectations. Blackwell Ultra powered the quarter, and Vera Rubin is already in production, with Nvidia launching the next-generation GPU before customers can get enough of the current one.

Its supply commitments jumped from US$119 billion to US$279 billion, largely to secure scarce memory. That upfront spending has hit margins and cash flow: free cash flow fell to US$21 billion from roughly US$48 billion three months earlier. But this reflects inventory and supply-chain investment for Rubin, not weakening demand. However, it comes with risks, too. Nvidia reserves memory, production capacity, and critical components in advance to avoid losing sales if demand remains very high. In a market with supply constraints, this is normal, but the company could end up with huge stocks it can’t immediately use if demand slows rapidly, production or supply delays occur, or if customers reduce their orders.

Jensen Huang, Nvidia’s CEO, says demand is close to 100% growth, but Nvidia is guiding for about 70% revenue growth because supply is the constraint. The company is raising prices by more than 15%, not discounting excess inventory. Under such a scenario, Nvidia could overtake Apple and Alphabet in terms of revenue, ranking behind only Amazon among American technology companies. All these hint at a company turning away business, not one with a demand problem.

One risk that was present before was that Nvidia’s customer base was concentrated on only a few big names. Big Tech is still doing plenty of the heavy lifting, with hyperscalers still representing about 55% of data-centre revenue. AI clouds, industrial and enterprise customers now account for the other 45%. Nvidia is no longer just a chipmaker; it is becoming the infrastructure layer of the AI build-out. This is the part of its model that is the hardest for competitors to replicate. Amazon has also committed to another 2 million GPUs over the next two years while building its own chips. This may tell us the competition is real, but nobody has found a way around Nvidia yet.

The agreement may also indicate that we are entering a new phase: AI is shifting from model development to permanent infrastructure for products, AI agents, inference, and enterprise applications. It’s a strategic race: no one wants to miss out on a technology platform with potential comparable to the generational shift to the mobile internet or the cloud.

For retail investors, Nvidia remains one of their favourites. At the end of last quarter, on the etoro trading and investment platform, it was the most held stock globally and by Romanian retail investors.  It is clear now that Nvidia can sell silicon chips. But the key question is whether the rest of the industry can build enough memory, power and data-centre capacity around them. At the same time, there is a clear risk in the industry that is responsible for Nvidia’s chip demand that investments will outpace revenue generated by AI. Most likely, we are seeing real investment in real technology, but with an even more real risk of overcapacity in certain segments. And in this environment, the winners of the AI race might be those who not only buy GPUs but also use them efficiently and monetize them.

Bogdan Maioreanu, etoro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania, among others. Bogdan is an Executive MBA from Asebuss and Washington University.

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