Nvidia (NASDAQ: NVDA) is set to open comfortably in the green this morning after reporting another blockbuster quarter, with revenue increasing by a whopping 62% year-on-year to $57 billion.
Needless to say, the artificial intelligence (AI) darling came in handily above Street estimates in its fiscal Q3 and offered jaw-dropping guidance for its current quarter ($65 billion in revenue) as well.
While skeptics continue to warn of an AI bubble, Nvidia’s numbers tell a different story.
But it’s not about the headline figures only. From supply-demand dynamics to margin supremacy, the deeper math behind NVDA’s dominance confirms artificial intelligence is not just hype.
It’s a structural shift!
For Nvidia, supply is the bottleneck
In a recent interview with CNBC, Wedbush’s senior analyst Dan Ives laid out a striking stat – for every Nvidia chip produced, there are 12 buyers lined up.
“The Street is underestimating demand by 20–30%,” he argued, citing channel checks across Asia and hyperscaler capex plans. This 1-to-12 supply-demand ratio isn’t speculative – it’s foundational.
It reflects real infrastructure buildout by Microsoft, Amazon, Meta, and OpenAI – all of whom are racing to deploy AI workloads at scale.
In bubble scenarios, supply typically overshoots demand. Here, supply is the bottleneck. That imbalance is a textbook indicator of secular growth, not frothy exuberance. Nvidia isn’t chasing buyers – it’s rationing chips.
Nvidia’s margins are well past the ‘holy grail’ threshold
Victor Orlovski – a Silicon Valley VC and Forbes contributor – recently described “Rule of 60” as the new gold standard for tech: a combination of growth rate and profit margin exceeding 60%.
Nvidia’s gross margin alone stood at 73.5% in the third quarter, blowing past that benchmark. In Orlovski’s framework, margins above 35% are elite; 60% is the “holy grail” for sustainable tech profitability.
As is evident, Nvidia’s margin profile isn’t just strong – it’s historically rare. It signals pricing power, operational efficiency, and deep customer reliance.
In bubbles, margins compress as competition and overcapacity erode profitability – but the giant’s margins are expanding. That’s not bubble behaviour – it’s dominance.
Jensen Huang says AI bubble concerns are overblown
Finally, on the Q3 earnings call, Nvidia’s chief executive, Jensen Huang, directly addressed bubble concerns. “There’s been a lot of talk about an AI bubble,” he acknowledged, but “from our vantage point, we see something very different”.
Huang laid out three structural shifts: the move from CPUs to GPUs, the rise of generative AI, and the emergence of agentic AI systems that reason and plan. These are not speculative use cases – they’re already driving revenue.
Huang added, “There are no dark fibers in AI,” meaning infrastructure is being used, not idling.
More importantly, his rebuttal is more than narrative only – it’s backed by $65 billion in forecasted Q4 revenue. All in all, when the CEO of the most critical AI supplier says it’s real, and the numbers agree, it’s hard to argue otherwise.
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