Nvidia’s quarterly earnings surpassed analysts’ expectations, signalling artificial intelligence demands remained strong. However, the company’s revenue growth slowed due to the base effect.
Nvidia reported fourth-quarter earnings for fiscal year 2025 that exceeded market expectations and provided a positive outlook for the current quarter. However, the performance was not as much of a blowout result as in the previous quarters. Its revenue growth also slowed due to the annual base effect. Nvidia’s share price initially rose nearly 3% but later fell more than 1% in after-hours trading.
Nvidia has been the biggest beneficiary of the AI boom since 2023, thanks to surging demand for its Graphic Processing Units (GPUs). Its share price soared 1000% over the past two years, with a market valuation topping $3 trillion (€2.86 trillion), making it the world’s second-largest company behind Apple. However, the slowdown in its revenue growth signals that the AI boom may have passed its peak at least for now.
Its earnings result came at a time when investors were rotating out of US tech stocks amid risk-off sentiment, while the Chinese DeepSeek’s AI model, offering a cheaper alternative, diverted funds from Wall Street to Chinese tech firms. Investors are scrutinising whether hyperscalers continued their heavy spending on AI infrastructure, translating into Nvidia’s data centre sales. Consequently, its earnings became even more critical in driving broad market sentiment, especially after Microsoft signalled plans to cut its spending on its capital expenditure.
“Nvidia is the bellwether for AI demand, and this result will once again alleviate the naysayers,” Josh Gilbert, a market analyst at eToro Australia, wrote in a note.
Blackwell deliveries ramp up
The spotlight was on Nvidia’s Blackwell, the most advanced computing chips supporting generative AI programming. During the reporting quarter, the company delivered $11 billion worth of these products, which is “the fastest product ramp in our company’s history,” it stated. Nvidia indicated that Blackwell sales were driven by large cloud service providers and represented 50% of its data center revenue.
CEO Jessen Huang commented: “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.”
Slowing growth
Nvidia’s sales from its key segment-the data centre reached a new record of $35.6 billion (€34 billion) in the fourth quarter, up 93% from a year ago. However, this marks the first time that growth slowed to below 100% since the second quarter of fiscal year 2024. The full-year revenue for the division has also surged to a record high of $115.2 billion (€110 billion), increasing 142% year on year.
The company’s overall revenue grew 78% to a record high of $39.3 billion (€37.5 billion), which was also the slowest pace since the AI boom in early 2023. Earnings per share came in at $0.89 (€0.85), beating the estimated $0.84 (€0.8). However, its gross margin fell to 73.5% from 75% in the previous quarter and 76.7% in a year-ago quarter.
Its second-largest segment – the gaming and AI PC – saw revenue declined by 11% year on year to $2.5 billion (€2.4 billion). However, this had little impact on Nvidia’s performance, as it only accounts for just 6% of the total revenue.
For the current quarter, Nvidia projects total sales of $43 billion (€41 billion), plus or minus 2%, representing 65% growth year on year. While the guidance exceeded analysts’ expectations, it indicates that the company’s growth is set to slow further. Additionally, it expects the gross margin to decrease further to between 70.6% and 71%, plus or minus 50 basis points, suggesting increased spending on new product developments.
