- Company’s optimistic outlook, articulated by CEO Jensen Huang, has provided a much-needed boost to investor confidence following a quarterly performance that, while solid, did not meet the lofty expectations set by Nvidia’s historical achievements.
- Generates $11b in revenue from Blackwell AI chips in the fourth quarter.
In the rapidly evolving landscape of artificial intelligence (AI), Nvidia Corporation has emerged as a pivotal player, particularly with the recent launch of its Blackwell product lineup.
The company’s optimistic outlook, articulated by Chief Executive Officer Jensen Huang, has provided a much-needed boost to investor confidence following a quarterly performance that, while solid, did not meet the lofty expectations set by Nvidia’s historical achievements.
With $11 billion in revenue attributed to Blackwell in the fourth quarter, Nvidia has characterised this product as experiencing the “fastest product ramp” in its history, a testament to the robust demand for its cutting-edge technology.
Despite this encouraging news, the broader AI industry faces significant uncertainties. Nvidia’s stock has experienced fluctuations this year, primarily driven by concerns that data centre operators may curtail their spending.
The emergence of Chinese startup DeepSeek has further compounded these anxieties, as its announcement of a low-cost chatbot development model raised fears about the potential diminishment of demand for Nvidia’s powerful AI chips.
In this precarious environment, Nvidia’s assertion of sustained growth, albeit without the explosive results characteristic of its past performances, is particularly noteworthy.
Data centre generates more revenue
For the upcoming fiscal first quarter, which concludes in April, Nvidia has projected sales of approximately $43 billion, slightly above analysts’ average estimate of $42.3 billion.
However, the company also indicated that gross profit margins may fall short of expectations, a point that could temper investor enthusiasm.
Notably, while Nvidia’s fourth-quarter sales of $39.3 billion exceeded analysts’ estimates, the margin of this outperformance was the narrowest observed since February 2023, reflecting a potential plateau in the company’s meteoric growth trajectory.
Furthermore, the profit of 89 cents per share, adjusted for certain items, surpassed Wall Street’s expectations of 84 cents, showcasing the company’s resilience in a challenging market.
Nvidia’s data centre unit remains its dominant revenue stream, generating $35.6 billion in sales, which exceeded the average estimate of $34.1 billion.
AI spending boom is far from over
However, the gaming segment, once the cornerstone of Nvidia’s business, reported sales of only $2.5 billion, falling short of the anticipated $3.02 billion.
Its data centre division alone now has more revenue than rivals Intel and Advanced Micro Devices have in total, combined.
The shift underscores the company’s transition towards AI and data centre solutions as the primary drivers of growth. The automotive segment, contributing $570 million, reflects Nvidia’s strategic diversification into new markets.
As Nvidia navigates these challenges, the company’s track record of consistently exceeding analysts’ estimates—having missed expectations only once in the past five years—sets a high bar for its future performance.
The recent selloff in AI-related shares, particularly following DeepSeek’s announcement, underscores the volatility inherent in the sector. Nvidia’s staggering loss of $589 billion in market capitalisation in a single trading day serves as a stark reminder of the market’s sensitivity to emerging competitors and shifting technological paradigms.
Nevertheless, key partnerships with major clients, such as Microsoft Corp, suggest that the momentum of AI investment remains intact. These companies have indicated their commitment to capital expenditure plans, reinforcing the notion that the AI spending boom is far from over.
Huang’s role as a global advocate for AI technology has positioned Nvidia at the forefront of this revolution, and his belief that AI is still in its nascent stages of integration into the economy may resonate with investors seeking long-term growth.