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.
The post A simple Nvidia math that proves AI is not a bubble appeared first on Invezz