AI Powerhouse Generates $39 Billion in Fourth Quarter, Exceeding Expectations
Nvidia recently shared its financial performance for the first part of the year, and stakeholders were eager to see how the company would fare after experiencing a significant drop in its market value last month. This decline was tied to the launch of a new AI model from China, which cast doubt on Nvidia’s dominance in the AI market.
For the fourth quarter of its fiscal year, Nvidia announced a revenue of $39.3 billion, earnings per share of $0.89, and a net income of $22.1 billion. This represented an impressive revenue growth of 78% and a profit increase of 71% compared to the same period a year ago. Analysts had anticipated lower figures, forecasting a revenue of $38.1 billion and earnings of $0.85 per share. Nvidia’s data center segment, which mainly includes the graphics processing units (GPUs) that drive many generative AI applications, generated $35.6 billion in sales, exceeding predictions.
Looking ahead, Nvidia expects revenue in the upcoming spring quarter to reach about $43 billion, which is slightly better than Wall Street’s expectations of $42.7 billion. CEO Jensen Huang expressed that the demand for Nvidia’s new Blackwell GPU system, launched late last year, has been “amazing.”
Despite these positive results, Nvidia’s stock saw a slight dip in after-hours trading. This downturn might be attributed to a small decline in gross profit margins, which the company’s CFO, Colette Kress, noted was due to “a transition to more complex and higher-cost systems” in the data center sector.
Nvidia’s growth, although slower than in previous quarters, remains impressive for a company of its size. It’s worth noting that Nvidia’s expansion far surpasses the recent 4% revenue and 10% profit growth reported by Apple, the only company with a higher market valuation than Nvidia.
In the past fiscal year, Nvidia achieved a remarkable net profit of $72.9 billion, marking a 145% increase from the previous year. This growth is even more significant when comparing it to the fiscal year that ended in January 2023, with profits soaring by 875% as Nvidia capitalized on the AI boom.
Before releasing its earnings, Nvidia’s stock fluctuated, increasing by nearly 4% during regular trading hours. However, fluctuations in the tech sector caused Nvidia to experience its lowest stock price since early February. Investor concerns regarding President Trump’s economic policies affected the performance of technology stocks, with the Nasdaq seeing notable declines. Leading up to the earnings announcement, NVIDIA’s stock was about 10% lower than its price before the last earnings report, reflecting market worries that emerging AI models, which could operate on cheaper technology, might dampen Nvidia’s sales.
Despite these challenges, many analysts remain hopeful about Nvidia’s future prospects, with a consensus price target of $175, indicating a potential increase of 38% from its recent price. Some analysts believe that the earnings call could be a turning point in how investors view Nvidia, suggesting a recovery in sentiment might be on the horizon.
Nvidia is at the forefront of the AI revolution. Industry experts predict that by 2025, it will control about 95% of the global GPU market. Even though its recent performance hasn’t exceeded broader market trends, its past achievements have positioned it as a leading player in the technology sector. CEO Jensen Huang highlighted that the notion of a slowdown in AI spending is inaccurate, emphasizing ongoing demand and growth in the field.
