Nvidia, the California-based chipmaker and leader in artificial intelligence (AI) technology, released its earnings report for the fourth quarter on Wednesday, showcasing both impressive growth figures and signs of market volatility as investors reacted to the results. The company reported revenues of $39.3 billion, marking a substantial 12% increase from the previous quarter and representing a remarkable 78% uptick compared to the same quarter last year. This performance exceeded analyst expectations of $38.04 billion. Net income was equally impressive at $22.06 billion, nearly double the $12.29 billion reported from the previous year.
CEO Jensen Huang noted the factors driving this growth, particularly highlighting the demand for Nvidia's next-generation Blackwell architecture. "Demand for Blackwell is amazing as reasoning AI adds another scaling law — increasing compute for training makes models smarter and increasing compute for long thinking makes the answer smarter," Huang stated during the earnings call. The Blackwell architecture contributed significantly to revenue, bringing in $11 billion during the quarter.
Nvidia's dominance within the AI sector is becoming more pronounced, with its data center revenue reaching $35.6 billion, reflecting a massive 93% increase year-over-year. This segment now accounts for 91% of the company’s total sales, underscoring the shift toward AI-driven services. Major cloud service providers such as Amazon, Microsoft, and Google constitute about 50% of the revenue from this segment, emphasizing Nvidia's pivotal role within the rapidly growing AI infrastructure.
Despite the overall positive earnings, Nvidia’s gaming segment, traditionally a stronghold for the company, exceeded expectations for sales of $2.5 billion but still lagged behind the anticipated $3.04 billion by notable margins. The gaming revenue showed an 11% decline compared to last year, even with the arrival of new graphics cards based on the Blackwell architecture. This underperformance highlights potential headwinds as the gaming market faces increasing competition and fluctuates amid economic uncertainties.
Chief Financial Officer Colette Kress brought forth concerns about future margins, indicating possible tighter gross profit margins as the company ramps up production of the Blackwell chip design. She also acknowledged the potential impact of U.S. tariffs, which may affect Nvidia’s cost structure and market performance. Analysts are closely observing these developments as they might exacerbate existing challenges for Nvidia.
Looking forward, Nvidia projected revenues of $43 billion with a 2% margin of error for the first quarter of fiscal 2025, significantly surpassing Wall Street estimates of around $41.78 billion. This forecast indicates potential year-over-year growth of 65%, yet it falls short of last year’s phenomenal 262% leap in revenue for the same period.
The company continues to invest heavily in share buybacks, with $33.7 billion allocated during fiscal 2025. Such measures are seen as affirmations of Nvidia’s sustained confidence to drive future growth as it navigates the competitive AI chip market.
While Nvidia showcased resilience and strong quarterly results, market reactions proved somewhat mixed immediately following the announcement. Following the initial gains of approximately 3% during regular trading, the stock fell by just under 1.5% during extended trading hours, indicating investors were hoping for even stronger results amid the rapidly changing tech industry. Many experts believe the tech company is at the forefront of the AI boom, leading it to become one of the most valuable companies on Wall Street, with market capitalization recently exceeding $3 trillion, compared to less than $600 billion two years prior.
Nvidia's ability to maintain momentum will likely hinge on how effectively it can leverage its technology advancements against the backdrop of stiffening competition from upstarts like DeepSeek and navigate any potential market challenges posed by economic factors.