Nvidia Outperforms in Q4 Amid AI Growth

Nvidia delivered impressive fourth-quarter earnings, exceeding Wall Street projections and providing an optimistic outlook for the upcoming quarter.

The company remains at the forefront of artificial intelligence (AI) expansion, with expectations of sustained growth through 2025. Despite a stable after-hours trading response, Nvidia’s financial results reinforced its dominant position in the AI sector.

Q4 Performance vs. Analyst Estimates:

Revenue: $39.33 billion (expected: $38.05 billion)
Adjusted EPS: $0.89 per share (expected: $0.84 per share)

For the first quarter of fiscal 2025, Nvidia forecasts revenue of approximately $43 billion (±2%), surpassing the $41.78 billion estimate from LSEG analysts. This projection implies a 65% year-over-year growth rate, marking a slowdown from the previous year’s staggering 262% growth.

AI Expansion and Blackwell Chip Rollout

CFO Colette Kress highlighted Nvidia’s expectations for a substantial revenue boost in the first quarter, driven by its next-generation AI chip, Blackwell. The company reported $11 billion in revenue from Blackwell sales in Q4, with CEO Jensen Huang describing demand as "amazing." Kress emphasized that Blackwell represents Nvidia’s fastest product ramp in history.

Nvidia’s data center business, accounting for 91% of total revenue (up from 83% a year ago and 60% in 2023), experienced a 93% year-over-year surge in sales, reaching $35.6 billion—exceeding forecasts of $33.65 billion. The company's AI-driven Hopper and Blackwell processors played a pivotal role in this growth, with Blackwell shifting focus from AI training to inference, requiring significantly more computational power.

Profitability and Margins

Net income for the quarter rose to $22.09 billion, or $0.89 per diluted share, compared to $12.29 billion ($0.49 per share) last year. However, gross margins declined to 73% (a three-percentage-point drop), reflecting increased costs associated with Nvidia’s newer, more complex data center products.

Investor Concerns and Competitive Landscape

Amid concerns over AI competition from emerging players like DeepSeek’s R1, Kress reassured investors that advanced AI models requiring complex computations could demand up to 100 times more Nvidia chips, reinforcing Nvidia’s continued dominance.

Sector Performance and Growth Challenges

Gaming Segment: Sales declined 11% year-over-year to $2.5 billion, missing the expected $3.04 billion, but the company introduced new consumer Blackwell-powered graphics cards.
Automotive & Robotics: Revenue surged 103% YoY to $570 million, although it remains a minor portion of Nvidia’s AI business.
Stock Buybacks: Nvidia repurchased $33.7 billion in shares during fiscal 2025.

Looking Ahead

While Nvidia continues to benefit from AI-driven demand, its growth rate is moderating as the company scales. The primary focus moving forward is ramping up Blackwell chip production to maintain its leadership in AI acceleration.

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