Nvidia posts strong earnings despite slower growth, with AI demand staying strong.
Nvidia has surpassed earnings expectations in its latest quarterly report, signaling continued demand for its AI-powered graphics processing units (GPUs). However, despite strong AI sales, Nvidia’s revenue growth showed signs of slowing due to base effect comparisons from last year.
In the fourth-quarter earnings report for fiscal year 2025, Nvidia exceeded market estimates, but its growth rate was not as explosive as in previous quarters. While the company’s share price initially surged by nearly 3%, it later declined by more than 1% in after-hours trading, reflecting mixed investor sentiment.
AI Growth Remains Strong, But Growth Slows
Nvidia has been a major beneficiary of the AI boom, driven by soaring demand for GPUs used in AI models. Over the past two years, Nvidia’s share price has skyrocketed by over 1,000%, pushing its market valuation to more than $3 trillion (€2.86 trillion), making it the second-largest company globally after Apple. However, the slowdown in its revenue growth indicates that the AI boom may have peaked, at least temporarily.
The decline in Nvidia’s revenue growth comes amid changing market conditions. Investors are rotating out of US tech stocks due to a more cautious outlook and shifting investments to Chinese tech companies, including DeepSeek, which has introduced more affordable AI models. This change in investor sentiment raises concerns about whether cloud service providers, Nvidia’s key clients, will continue their significant AI infrastructure investments.
Blackwell Chip Sales Drive Growth
Despite these challenges, Nvidia’s Blackwell chips—advanced products designed for generative AI—were a highlight in the earnings report. The company delivered a record $11 billion in Blackwell product sales during the quarter, marking the fastest ramp-up in its history. Blackwell chips accounted for 50% of Nvidia’s data center revenue, reflecting strong demand from large cloud service providers.
CEO Jensen Huang highlighted the remarkable demand for Blackwell, stating that these chips are key to scaling AI models and making them smarter, adding a new dimension to AI capabilities.
Slowing Growth in Data Center and Gaming Segments
Nvidia’s data center segment set a new record with $35.6 billion (€34 billion) in quarterly sales, up 93% year-on-year. However, this is the first time growth has slowed to below 100% since Q2 2024, signaling a potential deceleration in the pace of expansion. Over the full year, Nvidia’s data center revenue grew by 142%, reaching $115.2 billion (€110 billion).
Overall, Nvidia posted total revenue of $39.3 billion (€37.5 billion), marking a 78% increase compared to the previous year. While this is an impressive result, it represents the slowest growth rate since the start of the AI boom in 2023. Earnings per share (EPS) for the quarter were $0.89 (€0.85), beating analysts’ expectations of $0.84 (€0.80). However, Nvidia’s gross margin slipped slightly to 73.5%, down from 75% in the previous quarter.
In contrast, Nvidia’s gaming and AI PC segment saw an 11% decline in revenue, bringing in $2.5 billion (€2.4 billion). This segment contributes just 6% of Nvidia’s total revenue, so the decline had minimal impact on overall performance.
Forecast for the Upcoming Quarter
Looking ahead, Nvidia has forecast sales of around $43 billion (€41 billion) for the current quarter, representing a 65% year-on-year growth. While this exceeds analysts’ expectations, it suggests that the pace of growth will continue to slow. The company also expects a slight decrease in its gross margin, projecting a range of 70.6% to 71%, reflecting increased investment in new product developments.
Conclusion
Nvidia’s latest earnings report highlights the continued strength of AI demand, particularly for its advanced Blackwell chips. However, the slowdown in revenue growth and challenges in its gaming and AI PC segments point to a potential cooling in the AI boom. Investors will be watching closely to see if Nvidia can maintain its growth trajectory as the AI market matures.