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Nvidia’s profits and revenues soared last quarter as a rush among technology companies to build artificial intelligence infrastructure sustained demand for the advanced chips that have made it one of the AI boom’s biggest winners.
Sales increased 78 per cent year over year to $39.3bn, above estimates in a Bloomberg survey of $38.3bn. Net income surged to $22.1bn, up 80 per cent from a year earlier. The group expects to report revenue of about $43bn for the current quarter.
Nvidia had been among the top-performing stocks on Wall Street over the past two years, helping to power the US market higher, as investors bet on insatiable demand for its chips.
The record-breaking run for the shares was punctured last month after Chinese AI start-up DeepSeek claimed it could train models on less advanced chips than rivals such as US-based OpenAI.
In its first set of results since the claim cast doubt over future demand for its chips, Nvidia chief executive Jensen Huang on Wednesday shrugged off those concerns, saying there was “amazing” demand for the group’s latest-generation Blackwell chips.
Data centre revenues nearly doubled in the quarter ending January 26 as Big Tech companies swiftly built out AI offerings. Blackwell delivered $11bn in revenue for the quarter.
Huang specifically addressed DeepSeek during a call with analysts, saying new ‘reasoning’ models such as DeepSeek’s R1 consume much larger amounts of AI chip power than their predecessors, and its sudden arrival on the scene had “ignited global enthusiasm” for the technology.
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“DeepSeek threats or disruptions were not evident in Blackwell’s chip demand or data centre revenues,” said Dec Mullarkey, managing director at SLC Management. “The earnings were not a blowout, but they didn’t show any glaring vulnerabilities either.”
The Blackwell rollout hit some initial snags, with production issues and reports of some iterations of the chip overheating in servers. But Wednesday’s results suggested the transition from the previous chip architecture was proceeding smoothly.
Even though the pace of net profit growth exceeded that of revenues, Nvidia chief financial officer Colette Kress said gross margins had slipped because of the transition to the “more complex and higher cost” Blackwell systems. Gross margins, a measure of profitability that excludes operating expenses, were 73 per cent in the fourth quarter, compared with 76 per cent in the same period last year.
Despite Huang seeking to reassure investors over long-term demand for its chips, Nvidia is no longer the electrifying force it was for US stock markets for much of the past two years, when its often blowout quarterly results fuelled Wall Street’s enthusiasm for AI.
Nvidia’s shares were down 1.2 per cent shortly after Wall Street’s opening bell, but had been trading in positive territory during pre-market trading on Thursday before US President Donald Trump said he would impose an additional 10 per cent tariff on imports from China. The stock had risen almost 4 per cent on Wednesday before the release of its results.
The shares have recovered some of their losses since a record 17 per cent one-day plunge last month after DeepSeek stunned the AI industry, but remain down about 2 per cent this year. They surged by more than 800 per cent over the course of 2023 and 2024.
Ahead of Wednesday’s results, analysts also flagged uncertainties over how potential new US export controls and tariffs could affect Nvidia.
The group is exposed to geopolitical tensions between Washington and Beijing as they engage in an arms race over AI technology.
A new “AI diffusion” export control regime was also put forward in the last days of Joe Biden’s administration, aimed at making it harder for China to use other countries to circumvent US export restrictions on AI chips.
Nvidia took the rare step of publicly criticising the rules, saying they would weaken competitiveness and undermine innovation. But Donald Trump’s administration has shown little sign of reversing course on attempts to crack down on China’s access to leading-edge chips. The president has threatened new tariffs on semiconductors from Taiwan.
On tariffs, “at this point it’s a little bit of an unknown . . . until we understand further what the US government’s plan is”, Kress said.
Additional reporting by George Steer and Tim Bradshaw