Nvidia posts record revenue, eases bubble angst

Nvidia delivered record quarterly and annual revenue, beating Wall Street expectations and pushing back against claims that the artificial intelligence boom is overheating.

The Silicon Valley chip designer said revenue for the fourth quarter of its fiscal year ended 26 January 2025 rose to $39.3 billion, up sharply from a year earlier and above market forecasts. Full-year revenue reached $130.5 billion, more than doubling on the previous fiscal year, as demand for its data centre processors continued to outstrip supply.

Net income for the quarter surged to $22.1 billion, reflecting robust margins on high-end AI accelerators such as the H100 and its successor platforms. Earnings per share also comfortably exceeded analyst estimates, reinforcing Nvidia’s status as the primary beneficiary of the generative AI spending wave that has swept across the technology sector.

At the centre of the performance was the data centre division, which generated $35.6 billion in fourth-quarter revenue. For the full year, data centre sales totalled $115.2 billion, accounting for the overwhelming share of group revenue. Major cloud providers, enterprise customers and sovereign AI projects have continued to invest heavily in infrastructure designed to train and deploy large language models and other advanced AI systems.

Chief executive Jensen Huang described demand as “extraordinary”, pointing to a broadening customer base that now extends beyond hyperscale cloud operators to include automotive groups, healthcare companies and financial institutions. Nvidia has positioned itself not merely as a chip supplier but as a full-stack AI platform company, bundling hardware with software frameworks such as CUDA and networking technologies acquired through Mellanox.

The results arrive amid intensifying debate over whether valuations tied to AI are sustainable. Nvidia’s market capitalisation has soared over the past two years, briefly making it one of the world’s most valuable listed companies. Critics have warned that expectations embedded in its share price leave little room for disappointment, while supporters argue that AI investment is still in its early stages.

By exceeding forecasts once again, Nvidia has sought to counter suggestions of an imminent slowdown. Orders from leading cloud service providers remain strong, and management indicated that supply constraints, rather than weakening demand, have been the principal limiting factor. The company has been working with manufacturing partner Taiwan Semiconductor Manufacturing Company to expand advanced packaging capacity, a key bottleneck for AI chips.

Competition, however, is mounting. Advanced Micro Devices has introduced its MI300 series accelerators, aiming to capture a slice of the AI training and inference market. Intel is investing heavily in its Gaudi AI processors, while custom silicon designed by large cloud operators threatens to erode Nvidia’s dominance in certain workloads. Even so, Nvidia’s ecosystem advantage and established developer community provide significant barriers to entry.

Regulatory and geopolitical pressures also shape the outlook. Export controls imposed by Washington have restricted sales of certain high-performance chips to China, prompting Nvidia to develop modified products that comply with US rules. China has historically represented a meaningful share of data centre revenue, and further tightening of trade restrictions could affect growth trajectories.

Investors have been closely watching capital expenditure plans from technology giants such as Microsoft, Amazon and Alphabet, which collectively account for a substantial portion of AI infrastructure spending. Public disclosures indicate that these companies intend to maintain elevated investment levels, reflecting confidence that AI-driven services will generate long-term returns. Nvidia’s forward guidance pointed to another strong quarter, signalling that order pipelines remain healthy.

Beyond cloud computing, Nvidia is pursuing opportunities in automotive and edge computing. Its Drive platform is embedded in advanced driver-assistance systems and autonomous vehicle development programmes. Although automotive revenue remains modest compared with data centre sales, it has shown steady growth and offers diversification potential over time.

Financially, Nvidia’s gross margin expanded significantly, underscoring pricing power in a supply-constrained environment. Operating cash flow strengthened, bolstering the company’s balance sheet and enabling continued investment in research and development. Nvidia has also returned capital to shareholders through share buybacks and dividends, though growth investment remains the priority.