Nvidia (NVDA) just delivered a knockout punch with its Q4 FY25 Nvidia earnings, leaving skeptics in the dust and further cementing its dominance in the age of accelerated computing and artificial intelligence. With record-breaking revenue and impressive growth across its key market platforms, it's clear that Nvidia is not just riding the AI wave; it's creating it. Let's dive into the details of this stellar performance and what it means for investors.
Record-Breaking Revenue Growth
Nvidia's Q4 FY25 revenue reached a staggering $39.3 billion, marking a 78% increase from the same quarter last year and a 12% jump from the previous quarter. For the full fiscal year, revenue soared to $130.5 billion, a remarkable 114% surge compared to the previous year. This explosive growth was primarily fueled by the insatiable demand for Nvidia's data center solutions, which experienced a 93% year-over-year increase in Q4, reaching $35.6 billion. Moreover, for the full year, data center revenue skyrocketed 142% to $115.2 billion.
A key driver of this growth is the Blackwell architecture, which saw the fastest product ramp in the company's history, generating $11.0 billion in revenue in Q4. Large cloud service providers, such as AWS, CoreWeave, Google Cloud Platform, Microsoft Azure, and Oracle Cloud Infrastructure, accounted for approximately 50% of Nvidia's data center revenue, as these providers are bringing GB200 systems to cloud regions to meet growing customer AI demand.
Segment Performance
- Data Center: The data center segment continues to be Nvidia's primary growth engine, driven by the demand for accelerated computing platforms used in large language models, recommendation engines, and generative AI applications. Data Center compute revenue was $32.6 billion, up 116% year over year and 18% sequentially, driven by demand for the Blackwell computing platform and sequential growth from the H200 offering. Nvidia is transitioning from small NVLink 8 with Infiniband to large NVLink 72 with Spectrum X. Networking revenue was $3.0 billion, down 9% from a year ago and down 3% sequentially. However, Ethernet for AI, which includes Spectrum-X end-to-end ethernet platform, and NVLink products related to the ramp of our Grace Blackwell platform, experienced growth.
- Gaming: While gaming revenue experienced a sequential decline of 22% and an 11% year-over-year decrease in Q4, it still contributed a significant $2.5 billion. For the full year, gaming revenue increased 9%, driven by sales of GeForce RTX 40 Series GPUs. The decline in Q4 was attributed to limited supply for both Blackwell and Ada GPUs.
- Professional Visualization: Professional visualization revenue saw a 10% year-over-year increase in Q4 and a 21% increase for the full year, driven by the continued ramp of Ada RTX GPU workstations. These workstations are used for generative AI-powered design, simulation, and engineering.
- Automotive: The automotive sector continues to show strong growth, with a 103% year-over-year increase in Q4 and a 55% increase for the full year, driven by sales of Nvidia's self-driving platforms.
Key Financial Metrics
- Gross Margin: While GAAP gross margin for Q4 decreased to 73.0% (down 3.0 points year-over-year), the full-year GAAP gross margin improved to 75.0% (up 2.3 points year-over-year). The decrease in Q4 gross margin was primarily due to a transition to more complex and higher-cost systems within the data center.
- Operating Expenses: GAAP operating expenses increased by 48% year-over-year in Q4 and 45% for the full year, driven by higher compensation and benefits expenses due to employee growth and compensation increases, as well as increased engineering development costs.
- Net Income and EPS: GAAP net income for Q4 was $22.1 billion, up 80% year-over-year, with a diluted earnings per share of $0.89, up 82% year-over-year. For the full year, GAAP net income was $72.9 billion, up 145% year-over-year, with a diluted earnings per share of $2.94, up 147% year-over-year.
- Balance Sheet: Nvidia's balance sheet remains strong, with cash, cash equivalents, and marketable securities reaching $43.2 billion, up from $26.0 billion a year ago.
Commentary Highlights
Nvidia highlighted the company's record revenue and growth, particularly in the data center segment. The growth was attributed to the demand for accelerated computing platforms used for large language models, recommendation engines, and generative AI applications.
First Quarter of Fiscal 2026 Outlook
Nvidia's outlook for Q1 FY26 is incredibly promising:
- Revenue is expected to be $43.0 billion, plus or minus 2%.
- GAAP gross margin is expected to be 70.6%, plus or minus 50 basis points.
- GAAP operating expenses are expected to be approximately $5.2 billion.
What This Means for Investors
Nvidia's Q4 FY25 earnings demonstrate the company's unparalleled position in the AI revolution. The company's data center business is booming, driven by the increasing demand for AI computing power from cloud service providers and enterprises. While the gaming segment experienced a slight decline, it remains a significant contributor to Nvidia's overall revenue.
For investors, Nvidia represents a compelling long-term growth opportunity. The company's innovative products, strong financial performance, and strategic partnerships position it as a leader in the rapidly expanding AI market. Moreover, CEO Jensen Huang noted that demand for Blackwell is amazing. He added that AI is advancing at light speed, and agentic AI and physical AI are setting the stage for the next wave of AI to revolutionize the largest industries.
Conclusion
Nvidia's Q4 FY25 earnings were nothing short of spectacular, reinforcing the company's leadership in accelerated computing and AI. With a strong outlook for Q1 FY26 and a clear vision for the future, Nvidia is well-positioned to continue its growth trajectory and deliver value to investors. While risks remain, the potential rewards of investing in this AI powerhouse are significant.
