Nvidia reported blowout Nvidia earnings on Wednesday, surpassing Wall Street’s forecasts as its data center division delivered a 73% year-over-year sales jump. The overall revenue climbed 69% to $44.06 billion, ahead of the $43.31 billion analysts expected. In after-hours trading, NVDA stock jumped about 6%, putting it within 5% of its January record high.
Data Center Growth and China Headwinds
Nvidia’s data center business—fuelled by demand for AI chips—accounted for $39.1 billion, or 88% of total revenue. Large cloud providers contributed nearly half of that figure, and $5 billion came from networking products that link multiple GPUs for advanced AI tasks.
However, the quarter was marred by a U.S. export restriction on the H20 processor bound for China. The government informed Nvidia late in the period that its previously approved H20 chips would now require export licenses.
As a result:
- $4.5 billion in excess-inventory charges were taken.
- $2.5 billion in lost sales would have otherwise bolstered revenue.
- Gross margin fell to 61%, versus a pro forma 71.3% without the China-related hit.
CEO Jensen Huang lamented that the move “effectively closed” Nvidia’s Hopper data center business in China, a market he values at $50 billion. He emphasized, “Global demand for Nvidia’s AI infrastructure is incredibly strong,” underscoring confidence despite geopolitical strains.
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Financial Highlights and Guidance
Net income rose 26% to $18.8 billion, or 76 cents per share, up from $14.9 billion, or 60 cents, a year earlier. Adjusted earnings per share were 96 cents, topping estimates of 93 cents.
Looking ahead, Nvidia projected $45 billion in sales for the current quarter—slightly below the $45.9 billion consensus. The guidance shortfall reflects the China export issue rather than weakening demand.
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Diversified Revenue Streams
While data centers dominate, Nvidia’s other segments also posted strong gains:
- Gaming: Revenues grew 42% to $3.8 billion. The gaming division, long Nvidia’s core, now powers both 3D entertainment and select AI workloads. Its chips will feature in the upcoming Nintendo Switch 2 console.
- Automotive & Robotics: Sales jumped 72% to $567 million. Growth stemmed from expanded sales of chips and software for self-driving cars and connected vehicles.
- Professional Visualization: Revenue rose 19% to $509 million. This segment includes GPUs for 3D design and the new DGX Spark and DGX Station desktops aimed at AI developers.
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Shareholder Returns and Stock Outlook
Nvidia returned capital to shareholders by repurchasing $14.1 billion of stock and paying $244 million in dividends. With NVDA stock price climbing after the earnings release, investors are eyeing further upside as the company navigates export controls and captures growing AI markets.
Analysts will focus on how quickly Nvidia can restore its China pipeline and whether other markets will fill the shortfall. For now, the Nvidia earnings report today confirms that its AI-driven momentum remains intact—despite significant geopolitical hurdles.
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