Nvidia reported record earnings and promised better-than-expected growth. What about the stock

Nvidia's quarterly revenue rose 73% mainly due to demand for AI chips. Revenue for the period, for the entire last year, as well as sales of the data center segment all turned out to be record highs, the company said. In addition, the chipmaker promised that growth in the current quarter would be well above Wall Street's average forecast. That should reassure investors worried about the threat of an AI bubble, Bloomberg believes. However, the company's shares, which jumped immediately after the release, soon lost most of the growth.

Nvidia's revenues increased 73% year-on-year to $68.13 billion last quarter against the market's expectations of $66.2 billion, CNBC reported. This result was mainly due to growth in the key area of chip production for data centers - by 75% to $62.3 billion against analysts' expectations of $60.69 billion.

That business, as CNBC notes, now accounts for more than 91% of the company's sales. Its revenue has jumped nearly 13 times since ChatGPT was introduced, Nvidia said.

Hyperscalers remained the largest customer category, with their share of revenue expanding to over 50%. The company, however, insists that its base is becoming more diversified, and Nvidia CEO Jensen Huang assured that corporate adoption of AI agents is growing rapidly.

Total annual revenue increased 65% and broke the $200 billion mark for the first time.

The chipmaker's net income nearly doubled to $43 billion or $1.76 per share. Adjusted earnings per share reached $1.62, compared to analysts' forecast of $1.53.

Gross margin amounted to 75%. Investors feared that the company would not be able to maintain such high profitability due to the rising cost of components and memory chips. Nvidia claims to have built up sufficient inventories of these processors.

The company forecasts revenue in the current quarter in the range from $76.44 billion to $79.56 billion. Wall Street expected $72.78 billion, Bloomberg reports. The announced estimate corresponds to the most optimistic expectations, the agency points out.

"We expect sequential revenue growth through 2026 - above the $500 billion estimate announced last year from [chip sales of] Blackwell and Rubin. We have sufficient inventory and supply commitments to meet future demand, including shipments planned through 2027," CFO Colette Kress said in a conference call with investors, she was quoted by Bloomberg as saying.

Nvidia shares jumped by 3.8% in extended trading before losing all growth and going into the red zone. Quotes of the company's contract chip maker, TSMC, added about 1.5%, but then returned to the closing level of the main session. Memory chip maker Micron rose in price after the release, but after an hour and a half traded in the negative by 1.5%. AMD, a rival to Nvidia, fell in price by 1.6%.

Nvidia said that it did not include in its forecast for the current quarter possible revenue from shipments to the important Chinese market. However, the company's documents cited by Bloomberg show that "in February 2026, the U.S. government issued a license that will allow it to supply limited quantities of H200 chips to certain customers in China."

However, Nvidia clarifies that it has not yet received proceeds from the licensing program and does not know if those shipments will even be allowed.

During the conference call, Kress said Nvidia's Chinese competitors are "making progress," Bloomberg reports. This includes the so-called AI Tigers, which has gotten a boost from recent IPOs. The CFO recognized that chipmakers from the PRC have the potential to change the global balance of Xi and affect Nvidia's ability to compete globally.

Interest in Nvidia's upcoming next-generation Vera Rubin rackmounts, the successor to Grace Blackwell, is intensifying as the release approaches in the second half of the year, CNBC writes. CFO Kress said the company shipped the first test samples of the new chips to customers this week.

Vera Rubin is expected to deliver a tenfold increase in performance per watt, improving energy efficiency in an environment where data centers face severe power constraints.

The company also said it is expanding its supplier list beyond Asia: to the U.S. and Latin America. "These steps are expected to strengthen our supply chain, increase its resilience and redundancy, and meet the growing demand for AI infrastructure," Nvidia said in the report. - Our ability to ramp up capacity will depend on the respective region's manufacturing ecosystem being able to ramp up output in a timely manner."

Nvidia stock, which has a huge weighting of more than 8% in the S&P 500 index, has largely pulled the market up for several years, but its momentum has weakened in recent months. The stock has added about 5% since the start of the fourth quarter - including a 1.5% gain on Wednesday before the report was released. The company is trading at its lowest multiple since at least mid-2020, Bloomberg notes. Investors are revisiting inflated valuations of tech stocks and are becoming skeptical of the multibillion-dollar spending that Nvidia customers such as Alphabet and Microsoft are directing toward AI, the agency explains the slowdown.

At the same time, Nvidia was the only tech giant whose market capitalization did not decline this year. Seven of the eight players worth more than $1 trillion went down, CNBC noted .

On February 25, Nvidia shares ended trading at their highest level since November 10. The S&P 500 index rose 0.9% ahead of the release, while the tech-heavy Nasdaq Composite jumped 1.3%.

"The next meaningful movement in the stock market will be determined by today's Nvidia report and outlook," Miller Tabak + Co.'s chief market strategist warned clients. Matthew Maley before publication. - Nvidia remains the most important stock in the most important leadership group."

This article was AI-translated and verified by a human editor