- Nvidia has managed to exceed lofty expectations yet again, with the chip behemoth’s fourth-quarter results beating Wall Street’s forecasts as management also offered bullish guidance. Nvidia earnings are a bellwether for the entire gen AI trade.
Tech juggernaut Nvidia continued its winning streak on Wednesday, posting record quarterly revenue of $39.3 billion, up 12% from last quarter and 78% from a year ago, compared with Wall Street’s projection of $38.3 billion. Sales for the year came in at $130.5 billion, up 114% from the previous year.
The company forecast revenue for next quarter to hit $43 billion, slightly above the Street’s projections. Gross margins dipped for a second consecutive quarter, however, coming in at 73.5%, matching the guidance CFO Colette Kress offered last quarter. She said margins are expected to temporarily drop into the low 70s amid the Blackwell rollout.
“Another amazing quarter from the company,” said Will Rhind, founder and CEO of GraniteShares, who manages leveraged ETFs that give investors double the exposure to long or short positions on the stock. “The only slight thing that I guess you could probably nitpick on is [margins].”
Today, the company’s data center business accounts for most of its sales as customers, including nearly all of Big Tech, race to amass as much compute power as possible. The data center division’s $35.6 billion in revenue increased 93% from the same quarter last year and beat the Street’s expected number of $34.2 billion.
Nvidia stock rose 171% in 2024, accounting for more than a fifth of the S&P 500’s overall gain. The company’s earnings are viewed as a reckoning for the whole generative AI trade, making the chip behemoth’s financial results a momentous occasion for the entire equities landscape. Rhind noted this latest batch of earnings comes as the market deals with increased uncertainty about issues such as tariffs and inflation.
“It really feels like the emphasis on this particular earnings call is more important than perhaps any of the others so far,” he said.
Options trading ahead of the earnings release implied a price move of 10% in either direction, according to Bloomberg. The stock rose 3.7% heading into Wednesday’s results.
Shares held steady after the customary beat and raise last quarter, reflecting investors’ high expectations for future growth. The stock fell 18% in August, however, after only a modest earnings beat for the second quarter and muted guidance from management.
This was Nvidia’s first earnings release since Chinese startup DeepSeek released a new AI model that claimed to match American competitors for a fraction of the cost. Nvidia lost nearly $600 billion in market cap on the news, the largest single-day drop for any U.S. company in history.
For now, however, that has not seemed to quell Big Tech’s appetite to spend, with Meta, Amazon, Google, and Microsoft set to invest as much as $320 billion in AI and data center buildouts, per CNBC, citing comments from these companies’ CEOs on earnings calls earlier this year.
The DeepSeek breakthrough has also reportedly spurred more buying of Nvidia’s GPUs in China, where the company’s H20 chips are built to comply with U.S. export controls. There is also the possibility Chinese firms are stocking up in case President Donald Trump implements more restrictions.
