Nvidia's Fourth-Quarter Earnings Will Conclude a Historic Year

Nvidia, led by CEO Jensen Huang, reported its fourth-quarter earnings on Wednesday after the market closed. Expectations were high, with analysts predicting significant growth for the company.

According to estimates from LSEG, Nvidia was anticipated to achieve an adjusted earnings per share (EPS) of $0.84 and generate $38.04 billion in revenue.

This earnings report marks the end of what has been one of the most extraordinary years for a major corporation. Analysts projected that Nvidia would see a 72% increase in revenue for the quarter ending in January. For the entire fiscal year, sales were expected to more than double, approaching $130 billion.

The surge in Nvidia’s growth is largely attributed to its data center graphics processing units (GPUs). These GPUs are crucial for developing and deploying artificial intelligence applications, including popular models like OpenAI’s ChatGPT.

Over the last two years, Nvidia’s stock has skyrocketed by more than 440%, briefly making it the most valuable company in the United States, with a market capitalization exceeding $3 trillion. However, the pace of stock appreciation has slowed in recent months. Valuations are currently similar to those seen last October as investors seek to understand Nvidia’s future growth prospects.

During this earnings report, Jensen Huang will have the opportunity to address important questions regarding the company’s strategy amidst the ongoing AI boom.

Investors are particularly cautious about any indications that Nvidia's key clients, specifically hyperscale cloud providers, may be reducing their spending after a period of substantial capital investment. Additionally, concerns were raised following the emergence of the Chinese AI model, DeepSeek's R1, which brings into question the assumed demand for Nvidia’s chips.
There is also the looming possibility that U.S. authorities may tighten restrictions on Nvidia’s AI chip exports to China, citing national security as a concern. Currently, Nvidia is limited in its ability to export its most advanced AI chips to China and produces special versions of its chips for that market.

Moreover, investors are keen to learn more about the rollout of Nvidia's Blackwell chip. Reports suggest that the distribution of certain models may be slower than anticipated due to challenges related to heating and production yields.

Analysts at Morgan Stanley have noted that Microsoft is expected to be a major player, accounting for about 35% of Blackwell's spending in 2025, followed by Google at 32.2%. Other significant customers include Oracle at 7.4% and Amazon at 6.2%.

Recent news from TD Cowen indicated that Microsoft had canceled leasing contracts with private data center operators and was delaying negotiations for new leases. This raised fears regarding the future of AI infrastructure spending, particularly since Nvidia’s chips are a major expense in this sector.

However, Microsoft clarified its commitment, stating it still plans to invest $80 billion in infrastructure throughout 2025. Many of Nvidia's other primary customers also announced significant financial plans, like Alphabet with $75 billion and Meta with $65 billion in capital expenditures, while Amazon aims for $100 billion.

Morgan Stanley analyst Joseph Moore reassured investors that while longer lead times on land may affect GPU demand, the overall demand from Microsoft has not shifted. He currently holds a price target of $152 for Nvidia stock.

Investors will eagerly await any updates about Nvidia’s ongoing relationships with cloud companies. Furthermore, the guidance provided for fiscal 2026 will be crucial, especially concerning anticipated growth relative to last year’s elevated sales.

Nvidia, Earnings, Stocks