Nvidia Corporation (NASDAQ: NVDA) reported a sharp increase in fourth-quarter revenues and issued strong guidance, but its stock slid in after-hours trading on Wednesday. While the GPU giant delivered exceptionally strong earnings and revenue growth in Q4, it was not as big as in the trailing quarters. The company has successfully launched its high-performance graphic chip Blackwell amid strong demand, riding the AI chip boom.
The stock’s decline, reversing its initial gains soon after the earnings announcement, reflects the market’s concerns over a potential setback from the release of China-based open-source AI model DeepSeek, as a cheaper alternative to Nvidia’s advanced AI chips. The shares have lost about 15% since hitting an all-time high in early January. After the recent dip, the valuation has become more attractive from an investment perspective. Given the company’s promising prospects, the stock is unlikely to disappoint long-term investors.
Adjusted earnings, on a per-share basis, climbed to $0.89 in the fourth quarter from $0.52 per share a year earlier. The latest number topped expectations. The company posted an unadjusted net income of $22.1 billion or $0.89 per share for Q4, compared to $12.3 billion or $0.49 per share in the year-ago quarter. At $39.33 billion, Q4 revenue was up 78% from last year and above analysts’ estimates, mainly reflecting strong growth in the Data Center segment. Interestingly, quarterly earnings and revenue beat estimates consistently in the past two years.
According to the Nvidia leadership, Blackwell’s sales exceeded $11 billion, marking the fastest product ramp in history and surpassing expectations. As the futuristic AI chip architecture ramps, it will weigh on gross margins initially. But, the company expects gross margin to improve and return to the mid-70s late this fiscal year as it sees opportunities to improve the cost.
For the first quarter, the management forecasts adjusted and unadjusted gross margins to be 71% and 70.6%, respectively, plus or minus 50 basis points. The guidance for Q1 operating expense is approximately $5.2 billion, and $3.6 billion on an adjusted basis. The company will pay its next quarterly cash dividend of $0.01 per share on April 2, 2025, to shareholders of record on March 12, 2025.
Nvidia’s CFO Colette Kress said during the earnings call, “We exceeded our expectations in Q4 in ramping Blackwell, increasing system availability, and providing several configurations to our customers. As Blackwell ramps, we expect gross margins to be in the low 70s. Initially, we are focused on expediting the manufacturing of Blackwell systems to meet strong customer demand as they race to build out Blackwell infrastructure. When fully ramped, we have many opportunities to improve the cost, and gross margin will improve and return to the mid-70s, late this fiscal year.”
Shares of Nvidia traded down 3.6% on Thursday afternoon, extending the post-earnings downturn. The current value almost matches the stock’s price from six months ago.
The post Key takeaways from Nvidia’s (NVDA) Q4 2025 earnings report first appeared on AlphaStreet.
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