Nvidia released its first financial results of the year on Wednesday, delivering an eagerly anticipated earnings report. The report offered an early view of the company’s performance following the release of China’s less tech-intensive DeepSeek AI model, which triggered a significant market value loss for Nvidia last month.
Key Financial Highlights
In its fourth fiscal quarter, which concluded last month, Nvidia reported impressive figures: $39.3 billion in revenue, $0.89 adjusted earnings per share, and $22.1 billion in net income. This translated to a 78% year-over-year revenue increase and a 71% profit growth.
Analysts had predicted revenue of $38.1 billion and adjusted earnings per share of $0.85 ($19.6 billion net income), according to FactSet data, suggesting that Nvidia surpassed expectations. The performance was driven by the company’s datacenter unit, which encompasses the graphics processing units (GPUs) crucial for powering most generative AI models. This division generated $35.6 billion in sales, handily exceeding forecasts.
Nvidia projects spring quarter revenue of around $43 billion, with a possible variance of 2%, compared to Wall Street estimates of $42.7 billion. CEO Jensen Huang described the demand for the company’s Blackwell GPU system, which was launched late last year, as “amazing” in the earnings release.
Despite these strong results, Nvidia’s stock experienced a slight dip in after-hours trading. This somewhat negative investor reaction may be attributed to a slight decline in the company’s gross profit margins. Chief Financial Officer Colette Kress explained this as a result of “a transition to more complex and higher cost systems” in the datacenter division.
This represents the weakest top and bottom-line growth for Nvidia since the quarter ending April 2023. However, it’s still a robust expansion for a company of Nvidia’s size, especially considering its growth rate dwarfs Apple’s recent 4% revenue and 10% profit expansion.
Record Profit and Market Dynamics
Nvidia’s net profit for its fiscal year ending last month reached a staggering $72.9 billion, marking a 145% year-over-year increase. This also represents an 875% bottom-line increase from the fiscal year ending January 2023, reflecting the company’s strong performance during the AI boom.
Nvidia’s stock performance prior to the earnings report was somewhat volatile. Shares increased by nearly 4% during regular trading on Wednesday, closing at $131.28. However, the stock had declined earlier in the week. These losses came as tech stocks, in general, experienced a downturn due to investor concerns related to President Donald Trump’s economic plans. Before earnings, the stock was trading about 10% below pre-November earnings levels, even after Wednesday’s uptick.
Concerns in the market about the potential for high-performing, cost-effective AI models that don’t rely heavily on expensive Nvidia semiconductor technology might have led to the recent sell-off. Wedbush analysts, led by Dan Ives, characterized the earnings report as a “massive” test for a shaky stock market where sentiment had become “heavily skewed negative right now.”
Analyst Outlook
Heading into the earnings release, analysts generally maintained an optimistic outlook on Nvidia’s stock. The average price target among 68 analysts tracked by FactSet was $175, indicating a potential 38% upside from Nvidia’s Tuesday share price. Bank of America analysts, led by Vivek Arya, predicted the earnings call “could mark the trough in investor sentiment.” They are among the most bullish on Nvidia, with a $190 price target.
Market Dominance and Recent Performance
California-based Nvidia has become synonymous with the AI revolution, due to its status as a leading designer of technology used in training large-language models. Analysts at Morgan Stanley estimate that Nvidia will capture around 95% of the $158 billion global GPU market in 2025. This dominance propelled the company’s stock, making it the top-performing S&P 500 stock in both 2023 and 2024.
However, Nvidia hasn’t necessarily outperformed the broader market recently, gaining 3.7% in the last six months, which underperforms the S&P 500’s 6.7% return. Jensen Huang, the 13th-richest person in the world, dismissed concerns over a slowdown in AI spending, stating last week that the idea is “complete opposite” of the truth.
