Nvidia Q4 earnings beat estimates, shares flat

Nvidia reported fourth-quarter results that exceeded analysts’ expectations, driven by continued demand for its AI-focused data center processors.

The company also provided a strong outlook for the current quarter.

The AI giant posted revenue of $39.33 billion, surpassing the $38.05 billion expected by analysts polled by LSEG.

Adjusted earnings per share came in at $0.89, compared to estimates of $0.84.

The company’s gross margin stood at 73%, down three percentage points on an annual basis, which it attributed to higher costs associated with newer data center products.

For the current quarter, Nvidia expects revenue of $43 billion, plus or minus 2%, ahead of analysts’ estimates of $41.78 billion.

The company’s guidance implies 65% year-over-year growth, marking a slowdown from 262% growth in the same period last year.

Nvidia’s cash reserves have surged to $43.2 billion, a massive increase from $26 billion a year ago.

Shares of Nvidia were mostly flat in after-market trading on Wednesday.

Nvidia Q4: segment wise performance

Nvidia’s data center segment generated $35.6 billion in revenue, up 93% year-over-year, exceeding street estimates of around $34 billion.

This segment now represents 91% of total sales, up from 83% a year ago and 60% in the same period of 2023.

The data center business remains heavily reliant on its largest customers, which contributed approximately 50% of sales—consistent with the previous quarter.

Investors continue to watch for a decline in this dependency as AI adoption expands across a broader range of industries.

The company’s latest AI processor, Blackwell, contributed $11 billion in revenue during the quarter.

The gaming division reported revenue of $2.5 billion, down 11% year-over-year, missing expectations of $3.04 billion. Nvidia recently announced new consumer graphics cards based on the same Blackwell architecture as its AI chips.

The automotive business, though a smaller segment, saw significant growth, with revenue reaching $570 million, up 103% year-over-year.

Nvidia CEO Jensen Huang said demand for Blackwell has been “amazing,” while CFO Colette Kress noted that sales were primarily driven by large cloud service providers, which accounted for 50% of data center revenue.

Nvidia's recent struggles

Despite record-breaking growth, Nvidia’s stock has stalled in recent months.

Currently trading near levels last seen in October, investor sentiment has turned cautious as concerns rise over potential reductions in capital expenditures by some of the company’s largest 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.

Adding to the challenges, last month saw the emergence of DeepSeek, a Chinese startup that introduced an efficient “distilled” AI model.

DeepSeek’s R1 model has sparked debate over whether Nvidia’s high-powered GPUs are always essential for cutting-edge AI development.

The news briefly wiped nearly $600 billion from Nvidia’s market capitalization.