Crypto: Nvidia surpasses earnings forecasts

Nvidia’s fourth-quarter earnings for fiscal year 2025 surpassed market forecasts, offering an encouraging outlook for the current quarter.

The results were not as spectacular as in previous periods, and revenue expansion showed signs of deceleration due to the annual base effect. Following the announcement, Nvidia’s stock initially climbed nearly 3% before slipping more than 1% in after-hours trading.

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Since 2023, Nvidia has been the greatest beneficiary of the AI surge, fueled by skyrocketing demand for its Graphics Processing Units (GPUs). Over the past two years, its stock price has skyrocketed by 1000%, driving its market capitalization beyond $3 trillion (€2.86 trillion), making it the world’s second-largest company, just behind Apple. The slowing revenue growth suggests that the AI frenzy may have reached its peak, at least for now.

This earnings report arrived at a time when investors were shifting away from U.S. technology stocks, adopting a more cautious stance. Meanwhile, the emergence of DeepSeek’s AI model in China, which offers a more economical alternative, has drawn capital away from Wall Street and toward Chinese tech firms.

Investors are closely evaluating whether major cloud providers continued their aggressive investments in AI infrastructure, which directly influences Nvidia’s data centre revenue. Consequently, this earnings release carried even greater weight, particularly after Microsoft signalled its intention to scale back capital expenditures.

“Nvidia is the bellwether for AI demand, and this result will once again alleviate the naysayers,” wrote Josh Gilbert, a market analyst at eToro Australia.

All eyes were on Nvidia’s Blackwell chips, its most sophisticated computing hardware designed for generative AI applications. During the quarter, the company shipped $11 billion worth of these products, describing it as “the fastest product ramp in our company’s history.” Demand for Blackwell was driven by leading cloud service providers, accounting for half of Nvidia’s data centre revenue.

CEO Jessen Huang remarked: “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.”

Nvidia’s data centre division achieved record-breaking revenue of $35.6 billion (€34 billion) in the fourth quarter, reflecting a 93% year-over-year surge. However, this marked the first instance since the second quarter of fiscal year 2024 where growth slipped below the 100% threshold. Full-year revenue for this segment also reached an all-time high of $115.2 billion (€110 billion), marking a 142% increase from the prior year.

Overall, Nvidia’s total revenue climbed 78% to an unprecedented $39.3 billion (€37.5 billion), though this represented the slowest pace of expansion since the AI boom took off in early 2023. Earnings per share stood at $0.89 (€0.85), outpacing the projected $0.84 (€0.8). The company’s gross margin contracted to 73.5%, down from 75% in the prior quarter and 76.7% a year earlier.

The company’s second-largest sector—gaming and AI PCs—experienced an 11% year-over-year revenue decline to $2.5 billion (€2.4 billion). This downturn had a negligible impact on Nvidia’s overall performance, as the segment represents just 6% of total revenue.

For the current quarter, Nvidia forecasts total sales of $43 billion (€41 billion), plus or minus 2%, equating to 65% year-over-year growth. While this outlook surpassed analyst predictions, it also indicates that growth will continue to moderate.

Additionally, Nvidia anticipates its gross margin will decline further, settling between 70.6% and 71%, plus or minus 50 basis points, highlighting increased investment in new product innovation.

(Yahoo Finance)