Nvidia earnings solid but short of blowout: Our Quick Take

What Happened?

Nvidia reported its fourth-quarter fiscal year 2025 results for the period ending 31 January 2025. Key highlights include:

• Record Growth in Revenue: Nvidia reported a record quarterly revenue of $39.3 billion for Q4 FY25, marking a significant increase of 78% compared to the previous year and a 12% rise from Q3 FY25. This represents a beat compared to average analyst estimate of S$38.15 billion.
• Earnings beat estimates The GAAP earnings per diluted share for the quarter increased to $0.89, up 82% from the previous year. This represents a beat compared to average analyst estimate of S$0.85.
• Positive Guidance: For the first quarter of fiscal 2026, Nvidia expects revenue to be around $43.0 billion. This was slightly ahead of analysts average forecast of $42.3 billion, but below the highest forecast of $48 billion. 

Nvidia reported a record quarterly revenue of $39.3 billion. This marks a significant increase of 78% compared to the same quarter last year. The revenue growth is primarily driven by the robust demand in Nvidia's Data Center division.

The Data Center segment, a critical growth area for NVIDIA, saw a spectacular rise in revenue, reaching $35.6 billion for the quarter—up 93% year-over-year. This growth underscores Nvidia's expanding role in AI infrastructure and cloud computing.

Nvidia's Gaming division saw a decline in quarterly revenue to $2.5 billion, down 11% from a year ago. While demand remained strong through the holidays, shipments were impacted by supply constraints. 

Nvidia expects strong sequential growth in Q1 as supply increases, especially with the new GeForce RTX 50 series desktop and laptop GPUs.

Nvidia's GAAP earnings per share (EPS) were $0.89, up 82% from a year ago, while non-GAAP EPS also reached $0.89, marking a 71% increase from last year. This reflects the company's strong profit growth alongside its revenue gains.

Takeaways from Nvidia's earnings call

Here are some key takeaways from Nvidia's earnings call:

#1 - Blackwell "demand is amazing"

• Blackwell generated $11 billion in revenue in Q4, exceeding expectations
• Fastest product ramp in NVIDIA's history
• Production in "full gear" with multiple configurations, with supply increasing quickly
• Blackwell provides up to 25x higher token throughput and 20x lower cost versus previous generation

#2 - AI demand driven by scaling laws

Jensen Huang highlighted three "scaling laws" driving demand:

1. Pre-training scaling: Traditional foundation model training (still growing)
2. Post-training scaling: Using reinforcement learning and fine-tuning (requires more compute than pre-training)
3. Inference time scaling/reasoning: New AI models that "think longer" requiring 100x more compute per task

#3 - Major cloud providers driving growth in data center revenue

• Major cloud providers (AWS, Azure, GCP, OCI) represent about half of Data Center revenue
• Cloud providers are rapidly deploying Blackwell systems globally
• Enterprise customers showed strong growth with demand for fine-tuning and AI workflows
• Gaming demand remained strong but was impacted by supply constraints (expected to improve in Q1)

Future Outlook of Nvidia

For the first quarter of fiscal 2026, NVIDIA expects revenue to be around $43.0 billion, with projected GAAP and non-GAAP gross margins of approximately 70.6% and 71.0%, respectively.

• Blackwell Ultra on track for second half of 2025
• NVIDIA expects strong sequential growth in Q1 FY2026
• Gross margins currently in "low 70s" during Blackwell ramp, expected to return to mid-70s later in the fiscal year
• Company anticipates continued strong growth throughout 2025

Jensen Huang emphasized that AI has "gone mainstream," with applications expanding beyond consumer internet to enterprise, automotive, healthcare, and physical systems. 

He views the industry as being "just at the beginning of the age of AI" with reasoning AI, enterprise AI, and physical AI representing significant future growth opportunities.

Market reaction to Nvidia’s earnings

Nvidia's share price fluctuated in after-market trading following its earnings announcement, ultimately closing with a 1.2% decline. This follows a 3.7% rebound in its stock price on 26 February.

The slight pullback in Nvidia’s stock is likely a reflection of investor sentiment—while the company’s earnings were solid, they fell short of the blockbuster results Nvidia has reported in previous quarters.

According to Bloomberg, Nvidia's fiscal fourth-quarter sales surpassed analyst expectations by the smallest margin since February 2023, and its earnings exceeded forecasts by the narrowest margin since November 2022.

Looking ahead, all eyes will be on Nvidia's remarks at the upcoming GTC 2025 conference (17-21 March). Investors are eager for further insights into the company’s AI strategy, particularly regarding its plans to navigate competition from Chinese AI firms and any potential shifts in GPU demand.

How to use US Magnificent 7 stock DLCs on the SGX to boost your trading strategies

Daily Leverage Certificates (DLCs) offer active traders fixed leveraged exposure (e.g. 3x/-3x) on daily performance of the underlying stock.

With the new US stock DLCs on the SGX, traders can now seize opportunities in the Magnificent 7 stocks, including Nvidia, during Asian trading hours.

If you are keen to find out more about US stock DLCs, learn more at Societe Generale’s DLC website here.

Disclaimer

Any information provided in this article is meant purely for informational and investor education purposes and should not be relied upon as financial or investment advice, or advice on corporate finance.

This article is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to purchase any financial product or subscribe or enter any transaction. This article also does not take into account your personal circumstances, e.g. investment objectives, financial situation or particular needs and shall not constitute financial advice. You should consult your own independent financial, accounting, tax, legal or other competent professional advisors. 

The information provided in this article are on an “as is” and “as available” basis without warranty of any kind, whether express or implied. Beansprout does not recommend any particular course of action in relation to any investment product or class of investment products. No information is presented with the intention to induce any person to buy, sell, or hold a particular investment product or class of investment products.