The hardest thing about being Nvidia these days is living up to the recent past.
Nvidia’s fiscal fourth-quarter report late Wednesday continued the AI titan’s string of impressive results. Blowout spending on generative artificial intelligence continues to drive the company once primarily known for its PC gaming chips. Nvidia’s latest AI chip family, called Blackwell, racked up $11 billion in sales in its first quarter of shipping in volume, far ahead of the $3.5 billion analysts expected, according to consensus estimates from Visible Alpha.
Nvidia’s total company revenue of $39.3 billion in the quarter ended Jan. 26 was up 78% from the same period last year. That blows away the growth being reported by Nvidia’s trillion-dollar tech peers. Apple, Microsoft, Amazon, Meta Platforms and Google-parent Alphabet averaged 11.8% revenue growth in their December quarters. The company’s revenue projection of $43 billion for the April quarter also exceeded Wall Street’s forecast—abating some fears that the transition to the Blackwell lineup would cause a short-term hiccup in sales.
The strong numbers didn’t help Nvidia’s stock price much, though. Shares fell slightly in after-hours trading after having risen nearly 4% in Wednesday’s regular session. Revenue beat Wall Street’s consensus by about $1.2 billion, which is actually the smallest margin since Nvidia’s AI business started booming in early 2023. The company also confirmed that its newest product line—a family of AI chips and full-computing systems branded as Blackwell—will cause a small hit to the company’s gross margin for much of this year.
Investors shouldn’t fret over the latter. Even gross margins in the low-70% range that Nvidia said to expect early in the new fiscal year would be well above that commanded by most other chip companies; the 30 companies on the PHLX Semiconductor Index averaged 51.5% gross margins over the last year, according to data from S&P Global Market Intelligence. But Nvidia’s gross margin reached 79% a year ago, when its quarterly sales were tripling. The company’s new normal of high double-digit growth rates and rising costs to get a highly complex product line out the door suffers mainly by comparison.
Even more challenging is the rising suspicion among some that AI is a bubble about to pop in spectacular dot-com fashion. Nvidia and other prominent AI names saw their stocks melt down last month after claims from a Chinese AI startup called DeepSeek raised questions about the computing costs really needed to train advanced AI models. More recently, reports that companies like Microsoft might be trimming back their data center expansions have raised fresh worries about the state of AI demand. Nvidia’s stock price fell for six straight days prior to Wednesday and is still down 11% from last month’s DeepSeek panic, based on Wednesday’s closing price. The S&P 500 is down less than 3% in that time.
The massive piles of cash that tech giants plan to pour into capital spending on AI this year should ease some of those fears. Beyond that, Nvidia will need to show how it can keep building on the strong lead it already has. That will be the major theme of the company’s GTC conference next month, which is expected to highlight new products coming after this year’s Blackwell family.
The bar is high; Nvidia is now a $3 trillion company that depends on the spending of other big companies wanting an edge in AI. But with those companies unwilling to tap the brakes, Nvidia’s race still has some legs left.
Write to Dan Gallagher at dan.gallagher@wsj.com