Nvidia Q4 2025 Earnings: Company's AI Dominance Fuels 78% Revenue Growth
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Nvidia reported a 78% year-over-year increase in fourth-quarter revenue, totaling $39.3 billion, primarily driven by strong demand for its Blackwell AI chips. The data center segment contributed $35.6 billion, reflecting a 93% increase from the previous year. Net income for the quarter was $22.1 billion. Looking ahead, Nvidia projects first-quarter revenue of $43 billion.
Financial Highlights
Revenue: Nvidia's revenue continues to grow as the company benefits from the AI boom, driven by its data center GPUs, which dominate the AI accelerator market. Quarterly revenue increased by 78%, while full-year revenue surged 114% to $130.5 billion.
Net Income: Nvidia's net income for the quarter increased to $22.09 billion, or 89 cents per diluted share, compared to $12.29 billion, or 49 cents per share, in the same period last year.
Gross Margins: Nvidia reported a 73% gross margin for the quarter, reflecting a three-point decline YoY. The company attributed the decrease to the higher complexity and cost of its newer data center products.
Segmental Performance
Data Center
Nvidia reported $35.6 billion in data center revenue for the fourth quarter, marking a 93% YoY increase. Full-year data center revenue surged 142% to a record $115.2 billion. Nvidia's data center division now generates more revenue than the combined total revenue of its competitors, Intel Corp. and Advanced Micro Devices Inc.
Nvidia’s data center business for the quarter included $3 billion in sales from its networking components, which facilitate the connection of hundreds of thousands of GPUs. However, despite being identified as a growth area, networking sales declined 9% YoY.
Gaming and AI PC
Nvidia's graphics sales declined 11% YoY. However, full-year gaming revenue increased 9% to $11.4 billion. During the quarter, the company introduced new consumer graphics cards featuring the same Blackwell architecture used in its AI chips.
Nvidia initially built its reputation on graphics processors but later found that its technology could also be applied to AI. Its chips play a key role in training AI models, enabling them to recognize and respond to real-world inputs. Additionally, Nvidia’s components are used in inference systems, which run AI models and power applications like ChatGPT.
Professional Visualization
This segment achieved $1.88 billion in revenue for the fiscal year, marking a 21% increase from the previous year. The fourth quarter saw a 10% YoY rise and a 5% sequential increase, driven by the adoption of Ada RTX GPU workstations for applications like generative AI-powered design and engineering.
Automotive Segment
The Automotive segment reported $1.69 billion in revenue for the fiscal year, a 55% increase from the prior year a relatively small portion of its overall AI-driven business. Fourth-quarter revenue doubled up 103% YoY, propelled by sales of Nvidia's self-driving platforms.
Other Information
Nvidia’s focus this year is on ramping up shipments of its next-generation AI processors, known as Blackwell. The company reported $11 billion in Blackwell revenue during the fourth quarter, with CEO Jensen Huang describing demand as “amazing” and CFO Colette Kress calling it “the fastest product ramp in our company’s history.”
Blackwell sales were primarily driven by large cloud service providers, which accounted for approximately 50% of Nvidia’s data center revenue. The data center segment now represents 91% of the company’s total sales, up from 83% a year ago and 60% in the same period of 2023. Over the past two years, data center revenue has grown nearly tenfold.
While Nvidia’s chips have traditionally been used for AI model training, the company emphasized that Blackwell and other new-generation chips will play a crucial role in AI inference—delivering AI-powered software applications. Addressing investor concerns over efficiency improvements in AI models, Kress noted that advanced reasoning AI could require up to 100 times more computational power than traditional inference tasks.
Huang also downplayed concerns about custom AI chips developed by tech giants like Amazon, Microsoft, and Google, stating that designing a chip does not guarantee its deployment.
Nvidia’s data center business also included $3 billion in sales from networking components used to connect large-scale GPU clusters. However, networking revenue declined 9% year-over-year despite being identified as a growth area by the company.
Outlook
Nvidia’s latest report and guidance indicate confidence in sustaining its AI-driven growth momentum well into 2025. The company expects first-quarter revenue of approximately $43 billion, plus or minus 2%, representing a 65% year-over-year increase—though a slowdown from the 262% growth recorded in the same period last year.
The company projects GAAP and non-GAAP gross margins of 70.6% and 71.0%, respectively, with a variance of plus or minus 50 basis points.
Operating expenses are estimated at approximately $5.2 billion on a GAAP basis and $3.6 billion on a non-GAAP basis. Other income and expenses are expected to result in an income of around $400 million, excluding gains and losses from non-marketable and publicly held equity securities.
Nvidia also forecasts a GAAP and non-GAAP tax rate of 17.0%, with a possible fluctuation of plus or minus 1%, excluding any discrete items.
Stock Market Performance
On February 26, 2025, Nvidia's shares fluctuated in after-hours trading. Despite a 4% gain during regular trading, the stock ended at $129.32 after hours, reflecting a 1.5% drop.
Sources:
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