NVIDIA, the chipmaker at the centre of an artificial intelligence (AI) spending boom, gave solid quarterly results and a bullish revenue forecast for the current period, even if the numbers did not reach the blowout level that some investors were banking on.
Sales will be about US$43 billion in the fiscal first quarter, which runs to April, the company said on Wednesday (Feb 26). Analysts had estimated US$42.3 billion on average, with some projections ranging as high as US$48 billion. Gross profit margins also will be a bit short of projections.
The outlook comes at a shaky time for the AI industry. Nvidia shares have dipped this year on concerns that data centre operators will slow spending. Chinese startup DeepSeek also sparked fears that chatbots can be developed on the cheap, potentially reducing the need for Nvidia’s powerful chips for AI.
Nvidia shares fell less than 1 per cent in extended trading late Wednesday after the report was released. The stock had been down 2.2 per cent this year, following stratospheric gains in 2023 and 2024 that turned Nvidia into the world’s most valuable chipmaker.
Nvidia has been the biggest beneficiary of a massive surge in AI spending, doubling the size of its revenue in the past two years. Many of the largest technology companies are pouring tens of billions of US dollars into data centre hardware, and Nvidia is the dominant seller of processors that create and run AI software.
Along the way, Nvidia and chief executive officer Jensen Huang have become synonymous with the AI revolution – and the biggest bellwether for how it’s progressing. Huang has spent much of the past two years cross-crossing the world as an evangelist for AI technology and believes it’s still in the early stages of spreading throughout the economy.
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Sales in the fourth quarter, which ended Jan 26, rose to US$39.3 billion. That matched estimates, though some projections ranged as high as US$42 billion. Underlining just how quickly the company has grown: Its latest quarterly sales were bigger than Nvidia’s annual revenue two years ago, when it totalled US$27 billion.
Profit was 89 US cents a share, minus certain items. Wall Street was looking for 84 US cents.
The data centre unit, by far Nvidia’s biggest source of revenue, generated sales of US$35.6 billion. That beat the average estimate of US$34.1 billion. Gaming-related sales – once Nvidia’s core business – amounted to US$2.5 billion. Analysts projected US$3.02 billion on average. Automotive was US$570 million.
Heading into the earnings report, analysts had expressed concern about near-term growth in Nvidia’s biggest business, which serves data centre customers. The big question was whether supply constraints and a shift to the company’s latest design, Blackwell, would slow growth. The new technology is more sophisticated, bringing manufacturing challenges.
On that point, Nvidia was upbeat. The company got US$11 billion of revenue from Blackwell in the fourth quarter, something Nvidia described as the “fastest product ramp” in its history.
“We have successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of US dollars in sales in its first quarter,” Huang said. “Demand for Blackwell is amazing.”
DeepSeek added to the worries after releasing a powerful AI model that it said required far fewer resources to create. The announcement in late January led to a widespread sell-off in AI-related shares. Nvidia shed a staggering US$589 billion of capital in one day of trading, a record for the markets.
But key Nvidia customers, such as Microsoft, have maintained their capital expenditure plans, suggesting that the AI spending surge will remain strong. BLOOMBERG
