Nvidia’s fourth-quarter earnings exceeded analyst expectations due to the continued demand for AI-focused processors in data centers.
Also, the company provided an optimistic outlook for this quarter.
Analysts polled at LSEG had expected $38.05billion in revenue from the AI giant.
Earnings per share adjusted to $0.89 were higher than the $0.84 estimate.
Its annual gross margin was 73%. This is a three-point decline, which the company attributed to increased costs for newer products in data centers.
Nvidia’s current quarterly revenue is expected to be $43 billion plus or minus 2 percent, which will surpass analyst estimates of $41.78 Billion.
According to the company’s forecast, growth will be 65% over last year. This is a significant slowdown compared with 262% in the previous year.
Nvidia has increased its cash reserves to $43.2 billion. This is a huge increase from the $26 billion they had a year earlier.
In the after-market trade on Wednesday, shares of Nvidia remained mostly unchanged.
Nvidia Q4: segment wise performance
Nvidia’s datacenter segment generated revenue of $35.6 billion, an increase of 93% over the previous year, and exceeded street estimates around $34 billion.
The segment represents now 91% of the total sales. This is up from 83% one year ago, and 60% for 2023.
Data center sales are still heavily dependent on the largest clients, who contributed about 50% to total revenue. This is consistent with previous quarters.
As AI is adopted by a wider range of industries, investors continue to monitor this dependence.
Blackwell, the company’s new AI processor, generated $11 billion of revenue in the third quarter.
Gaming division revenue was $2.5 billion which is down by 11% from last year. This missed the expectations of $3.04 Billion. Nvidia announced recently new consumer graphics card based on Blackwell architecture, the same as its AI chip.
Automotive business experienced significant growth. Revenues reached $570 millions, an increase of 103% over the previous year.
Nvidia’s CEO Jensen Huang described Blackwell as “amazing” while Colette Kress, CFO of Nvidia noted that the sales are primarily driven by cloud service providers who account for half of all datacenter revenue.
Recent Nvidia struggles
Nvidia stock is stagnant despite record growth.
Investor sentiment is cautious, as investors are concerned about possible reductions in the capital expenditures of some of a company’s biggest customers.
A significant portion of Nvidia’s revenue comes from a small group of hyperscalers–companies operating massive server farms–whose spending decisions heavily influence the chipmaker’s performance.
Last month, DeepSeek, an AI startup from China, introduced a “distilled” model of efficient AI.
DeepSeek R1 has ignited a debate about whether Nvidia GPUs with high performance are essential to cutting edge AI development.
Nvidia briefly lost nearly 600 billion dollars in market value.
The post Nvidia Q4 Earnings Beat Estimates, Shares Flat may be updated as new developments unfold.
