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Chip designer NVIDIA Corporation posted another set of strong earning results at market close earlier today when it released its report for fiscal year 2025's fourth quarter. NVIDIA earned $39.3 billion in revenue and $0.89 in adjusted earnings per share, which allowed it to comfortably beat analyst estimates of $38.05 billion and $0.84, respectively. More importantly, the firm guided $43 billion in revenue for its current quarter, which was more than a billion dollars higher than the $41.78 billion analyst estimates. Investors weren't impressed, however, as the stock remained flat in aftermarket trading immediately after the earnings report was released but went on to gain 2.76% later on.
NVIDIA CEO Touts Strong Demand For Blackwell GPUs As Firm Reports Fourth Quarter Earnings
Heading into today's earnings report, analysts and investors were quite jittery about NVIDIA as they entered the month after January's DeepSeek selloff which wiped close to $600 billion from the firm's market value. However, NVIDIA's growth trajectory remained robust during Q4 as the firm's $39.3 billion in revenue marked a 78% annual growth while its $22 billion in net income marked a 72% annual growth. Both of the metrics beat analyst estimates, and so did NVIDIA's Q1 guidance of $43 billion.
As part of his prepared remarks, CEO Jensen Huang stressed that the demand for NVIDIA's Blackwell GPUs remains strong. Blackwell, which is NVIDIA's latest AI GPU lineup, has seen orders pushed into the year's second half due to availability constraints stemming from its complex manufacturing process.
As per Huang, "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."
However, despite the top and bottom line beat, NVIDIA's shares remained flat in early aftermarket trading. Along with its revenue and EPS, another key metric that has driven the stock price performance is the margin. NVIDIA's latest chips are costly to produce and investors have previously punished the stock because of the firm's inability to eke out higher margins. Later, as investors digested the results, the shares jumped by 2.76%.
While NVIDIA's top and bottom line metrics did beat analyst estimates, its margins remained tough. For Q4, the firm's adjusted gross margin sat at 73.5% to mark a 1.5 percentage point annual drop. As part of her earnings commentary, CFO Collete Kress explained that "gross margins for the fourth quarter decreased from a year ago and sequentially, primarily due to a transition to more complex and higher cost systems within Data Center."
Its Q1 margins guidance didn't impress investors either. For the first quarter, NVIDIA expects gross margins to sit at 71%, which is more than a percentage point lower than consensus LSEG estimates of 72.2%. The firm's Blackwell ramp appears to be playing a role here, and it is possible that had it not been for a revenue and guidance beat, then the margins miss could have driven the stock substantially lower in aftermarket trading.
Crucially, however, NVIDIA's upbeat guidance removes doubts surrounding a drop in demand for its AI GPUs. Last month's DeepSeek selloff was premised on the assumption that training AI models could require fewer GPUs and lower spending. However, along with multi-billion dollar capital expenditure commitments by big tech, the upbeat guidance appears to assuage these worries.
