Nvidia tops earnings expectations on revenue and profit
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Nvidia beat expectations on quarterly revenue and earnings Wednesday afternoon as investors watch closely for clues on how the company is weathering the emergence of a powerful new Chinese AI model.
Why it matters: Nvidia has become a proxy for the health of the AI economy.
Between the lines: The AI chips giant posted revenue of $39.3 billion in the quarter ended Jan. 26, up 78% from a year earlier.
- Net income came in at $22.1 billion, up 80% from a year earlier.
- Investors were expecting revenue of $38.16 billion and net income of $19.74 billion, according to S&P Capital IQ.
The big picture: China-based DeepSeek's new AI model turned heads earlier this year with its stunning efficiency, raising questions about whether investment in the most advanced and costly Nvidia chips is as necessary as once thought.
Investors were also looking for insight into how Nvidia's next-gen GPU architecture, dubbed Blackwell, is performing.
- The company reported $11 billion in Blackwell revenue in the period, calling it "the fastest product ramp in our company's history."
- "Demand for Blackwell is amazing as reasoning AI adds another scaling law — increasing compute for training makes models smarter and increasing compute for long thinking makes the answer smarter," Nvidia CEO Jensen Huang said in a statement.
Zoom in: Data center related sales continue to make up most of Nvidia's revenue, totaling $35.6 billion for the period, up 93% from a year earlier.
- The company also said it will serve as a "key technology partner" for the $500 billion Stargate AI project recently announced by President Trump and several major tech companies, including OpenAI.
What we're watching: Nvidia shares were vacillating up and down in after-hours trading, as investors continued to unpack details.
- One area of note — the company's gross margins for the quarter decreased from a year ago and the prior period, "primarily due to a transition to more complex and higher cost systems within Data Center," Nvidia said.
- Nvidia CEO Jensen Huang hailed DeepSeek as an impressive advancement but described it as an example of the "extraordinary" demand to come from reasoning models for computing power.
- "We designed Blackwell for this moment," Huang said on an earnings call.
The bottom line: The stock is down more than 5% this year after booming in 2023 and 2024.
