Nvidia Lands Another Stellar Quarter But Issues More Conservative Growth Forecast
Ahead of its Wednesday earnings, Nvidia started the year on an 8% decline, weighed down by fear, uncertainty, and doubt around China’s DeepSeek chatbot — which controversially suggested that it used less sophisticated computers to train its recent model. Despite investor anxiety, analysts saw the semiconductor goliath’s revenue rising 72% year-over-year. It did more than that.
Top of mind, top of market: The most important stock on Wall Street gave investors just what they ordered — a beat and raise. Quarterly revenue came in 78% higher year-over-year at $39.3B, with the data center segment representing roughly 90% of that total. Of that, ~$11B came from the chipmaker’s new Blackwell AI chip, which has seen “amazing” demand, according to CEO Jensen Huang. However, the rollout of the graphics card titan’s highly sought-after chip has faced supply bottlenecks — and getting to scale has had downward pressures on margins. As a result, stock gyrated after the report.
- Nvidia’s gross margin declined from 76.7% to 73.5% YoY — and the company forecasted an adjusted gross margin of 71% for the coming quarter, falling below Wall Street estimates.
- Further, the firm issued a relatively conservative forecast for Q1, guiding for 9% quarter-over-quarter growth to $43B ± 2% — analysts polled by Bloomberg expect $42.3B.
The Only Game in Town
Wall Street’s most important stock is unlikely to lose relevance anytime soon, in part because of a row of spending expected to take place this year. Mag7 tech giants have indicated to the market that they plan to invest $320B in capital expenditures this year, with the bulk of that likely flowing to Nvidia, which remains the dominant player in AI chips.
- Morgan Stanley analysts anticipate that Nvidia will capture 95% of the global GPU market in 2025, which it values at approximately $158B — if accurate, that’s 46.9% of the spending the Mag7 has publicly earmarked.
- However, leaders like Microsoft CEO Satya Nadella have indicated that they might cut back on traditional data center spending — comments that have had reverberations in markets and could impact if true.
Soldiering on: It could take several quarters to see if tech giants maintain their aggressive AI spending — and investors will be looking for signs of traction from businesses going “all in,” like Salesforce. In the meantime, Nvidia will need to continue navigating sky-high demand and new export controls, both limiting factors on their growth.
Valuation station: At $3T, Nvidia is by far the most valuable US company. And after a 1,766% rally over the past five years, even some execs aren’t too sure about its valuation. Corporate insiders — who own 0.72% of the company — have almost exclusively sold their stock vests over the last year. Maybe they know, deep down, that besting Nvidia’s record $130.5B revenue in 2024 will prove hard in 2025 — even with spendthrift clients like these.
