Nvidia has reported robust demand for its AI chips, particularly its new Blackwell products, despite facing competition from the low-cost Chinese rival DeepSeek. The company’s latest earnings report revealed significant revenue growth, indicating that major tech players continue to invest heavily in AI infrastructure.
Key Takeaways
Nvidia's revenue for the last quarter reached $39.3 billion, a 12% increase from the previous quarter and a staggering 78% year-on-year growth.
The company forecasts revenue of approximately $43 billion for the upcoming quarter, driven by strong demand for its Blackwell chips.
Despite a recent drop in share value due to DeepSeek's emergence, Nvidia's long-term outlook remains optimistic, with no signs of waning demand from major clients like Microsoft and Amazon.
Strong Earnings Report
Nvidia's latest earnings report has exceeded market expectations, showcasing the company's resilience in the face of competition. The revenue of $39.3 billion not only surpassed the guidance of $37.5 billion but also outperformed FactSet consensus estimates of $38.1 billion. This growth is primarily attributed to the data centre segment, which saw a remarkable 93% increase year-on-year.
The company’s new Blackwell products contributed significantly, generating $11 billion in revenue. Nvidia's adjusted gross margin stood at 73.5%, slightly down from the previous quarter but in line with expectations due to increased costs associated with the new product line.
Future Projections
Looking ahead, Nvidia anticipates a revenue of $43 billion for the upcoming quarter, which would represent a 9% sequential increase and a 65% year-on-year growth. This optimistic forecast is bolstered by the ongoing capital expenditure plans of cloud computing giants, indicating sustained demand for Nvidia's products.
The DeepSeek Challenge
The emergence of DeepSeek, a Chinese competitor offering lower-cost chips, initially caused a significant drop in Nvidia's market value, with shares losing nearly $600 billion in a single day. DeepSeek's chatbot, which utilises these cheaper chips, quickly became the most popular free application on Apple's App Store, raising concerns about the sustainability of Nvidia's market dominance.
However, Nvidia's founder, Jensen Huang, has reassured investors that demand for Blackwell chips remains strong. He highlighted that the advancements in AI, particularly in reasoning and agentic AI, are driving the need for increased computational power, which Nvidia is well-positioned to provide.
Market Analysts' Insights
Market analysts have expressed confidence in Nvidia's long-term prospects, suggesting that the demand from major tech companies remains robust. Derren Nathan, head of equity research at Hargreaves Lansdown, noted that the investment case for Nvidia as a leader in AI technology is compelling, especially with significant investments from companies like Meta.
Despite the competitive landscape, Nvidia's valuation appears stable, with analysts expecting upgrades to full-year earnings estimates following the latest results. The company’s focus on AI inference, which is expected to dominate the AI chip market in the coming years, further solidifies its position as a market leader.
In conclusion, while the threat from DeepSeek poses challenges, Nvidia's strong earnings and optimistic outlook suggest that the company will continue to thrive in the rapidly evolving AI landscape.
Sources
Nvidia signals strong AI chip demand despite DeepSeek threat, MSN.
Nvidia signals strong AI chip demand despite DeepSeek threat, Yahoo News UK.
