The chipmaker posted record-breaking quarterly revenue and outlook, despite mounting pressure from Chinese AI firm deepseek
Nvidia appears to have evaded threats posed by Chinese AI firm DeepSeek, with the chipmaker forecasting record-breaking revenue for the next financial quarter.
Nvidia stock took a beating in January, shedding nearly $600 billion in value as DeepSeek launched a free AI model built at a fraction of the cost.
The selloff amounted to a record single-day loss for U.S. stocks but soon recovered as major companies such as Meta and Microsoft confirmed their plans to continue investing heavily in AI.
Moreover, the Silicon Valley chipmaker, led by CEO Jensen Huang appears to have overcome mounting pressure from overseas AI firms, posting record-breaking Q4 2024 earnings and Q1 2025 forecasts on Wednesday.
Indeed, the company recorded revenue of $39.3 billion for Q4 2024, up 12% from the previous quarter, and projected revenue of $43 billion for Q1 2025 – a clear demonstration of the firm’s strong market position despite the challenge posed by DeepSeek.
Traders reacted accordingly, with Nvidia shares having surged 26% in after-hours trading on Wednesday.
Nvidia stock remains unstable – Is it a buy?
However, Nvidia stock has since tumbled 6%, with the market perhaps weighing the slight decline in gross profit margins, which fell from 74.6% the previous quarter to 73%.
“GAAP and non-GAAP gross margins for the fourth quarter decreased from a year ago and sequentially, primarily due to a transition to more complex and higher cost systems within Data
Centers,” said the firm’s CEO, Colette Kress, in an official statement.
Analysts, moreover, remain upbeat about Nvidia, with the stock trading at just 23 times its fiscal 2027 earnings projections. According to Chis Casno, MD at Wolfe Research, this should be a signal of promise for anyone considering buying the stock.
“The combination of that valuation, near-term spending momentum, and the long-term opportunity gives us no reason to be anything but bullish on the stock,” he told MarketWatch.
Nvidia has also revealed via its 10-K filing with the Securities and Exchange Commission that it has three major clients that each account for at least 10% of revenue. While Nvidia doesn’t name these clients, they are likely to be among the big spenders in the artificial intelligence, with the likes of Meta, Microsoft, Amazon and Oracle.
And this trend of major U.S. firms relying on Nvidia for AI chips is likely to continue, with President Donald Trump’s campaign of hefty tariffs meaning that looking abroad for such resources is unlikely to be a viable option any time soon.
This is another key consideration for investors, with Nvidia’s future business prospects seemingly looking healthy and stable.
