Nvidia’s robust growth forecast for the first quarter indicated that the demand for its artificial intelligence (AI) processors was still thriving. Additionally, the company reported that orders for its new Blackwell semiconductors were “amazing.”
The company’s forecast serves to dispel concerns regarding a decrease in hardware expenditures that surfaced last month in response to DeepSeek’s assertion that it had created AI models that were comparable to those of Western competitors at a fraction of the cost.
After concluding up 3.7% in regular trading, its shares experienced a slight decline in choppy extended trading before rebounding slightly. Nvidia’s shares have increased by over 400 percent over the past two years, making it the most significant beneficiary of a rally in AI-linked equities.
CEO Jensen Huang expressed optimism in his commentary, stating that “AI is advancing at light speed” and that “demand for Blackwell is amazing.” This comments should be encouraging for AI-related equities that have experienced a decline in the past week.
“We have effectively increased the production of Blackwell AI supercomputers on a massive scale, resulting in billions of dollars in sales during the first quarter,” he stated”
As it transitions to a new chip architecture known as Blackwell, Nvidia is undergoing a critical product transition. This transition involves the transition from the sale of individual chips to the development of complete AI computing systems that integrate graphic chips, processors, and networking equipment.
In the fourth quarter, the Santa Clara, California-based company generated $11 billion in revenue from Blackwell-related products, which accounted for approximately 50% of the company’s total data centre revenue.
Nvidia Projects $43bn Revenue in Q1, Exceeding Analyst Expectations
According to LSEG, the company anticipates a total revenue of $43 billion, with a margin of error of plus or minus 2 percent, for the first quarter, in contrast to the average estimate of $41.78 billion by analysts.
Jacob Bourne, an analyst at eMarketer, stated that there was a greater degree of scepticism surrounding this report than in previous quarters. This was due to concerns regarding the efficiency of DeepSeek’s model and the Blackwell implementation. “However, the findings have eliminated any uncertainties.”
Nevertheless, the company’s margins have been impacted by the complex and expensive Blackwell ramp-up.
According to data compiled by LSEG, Nvidia’s first-quarter gross margin is expected to fall marginally below expectations on Wednesday, falling to 71%, compared to Wall Street’s 72.2 percent forecast.
However, during a conference call, Nvidia’s Chief Financial Officer, Colette Kress, stated that the company would revert to the mid-70pc gross margin range later in the fiscal year as it increased the production of its Blackwell chips, thereby reducing costs.
Nvidia experienced the greatest one-day loss in market value of any US company, with a $593 billion loss in market value, following DeepSeek’s sudden rise last month. Consequently, the AI rally lost some of its momentum.
Investors raised concerns regarding the sustainability of the demand for AI processors and the substantial capital expenditures that large US technology companies, such as Microsoft, had pledged. In the current fiscal year, Microsoft has allocated $80 billion for AI, while Meta Platforms has committed up to $65 billion.
According to a recent broking report, Microsoft has terminated licenses for substantial data centre capacity in the United States, which implies that there may be an oversupply.
However, on Monday, Reuters reported that Chinese companies are increasing their orders for Nvidia’s H20 AI processor as a result of the strong demand for DeepSeek’s low-cost AI model.
Third Bridge analyst Lucas Keh stated, “Nvidia’s momentum with Hyperscalers appears to persist, despite the advancements made by DeepSeek.” This statement pertains to significant cloud-computing organisations.
In additional positive news for Nvidia, CFO Kress announced that the Stargate data centre project, which was announced by US President Donald Trump last month, will utilise Nvidia’s Spectrum X ethernet for networking. The company’s data centre segment encompasses the ethernet products.
Nvidia’s adjusted per-share profit was 89 cents, which was higher than the consensus estimate of 84 cents per share. The fourth quarter’s revenue increased by 78% to $39.3 billion, surpassing the projected figure of $38.04 billion.
The data-centre segment, which generates the majority of Nvidia’s revenue, experienced a 93% increase in sales to $35.6bn in the quarter ending January 26, surpassing the projected figure of $33.59bn. In the previous quarter, the segment experienced a growth rate of 112 percent.
