What just happened? Nvidia has alleviated investor concerns over the amount of money companies are spending on AI products. Team Green has reported better-than-expected fiscal fourth-quarter results, with 75% of growth coming from its data center business. Elsewhere, gaming revenue was up 47% to $3.7 billion, though Nvidia admitted it expects supply constraints to continue.
Nvidia reported $68.1 billion in revenue for the fourth quarter and $1.62 earnings per share, beating analyst estimates of $66.1 billion and $1.54, respectively.
There have been plenty of concerns over the huge amount of money being spent within the AI industry recently, but Nvidia's total revenue for the year hit a record $215.9 billion. Net income, meanwhile, almost doubled to $43 billion for the quarter – up 73% from $39.3 billion a year earlier – and data center revenue reached $62.3 billion.
"Our customers are racing to invest in AI compute – the factories powering the AI industrial revolution and their future growth," said CEO Jensen Huang.
In the gaming and AI PC segment, fourth-quarter revenue was up 47% YoY to $3.7 billion, driven by strong Blackwell demand, while full year revenue rose 41% to a record $16.0 billion.
Credit: App Economy Insights
Nvidia CFO Colette Kress did warn, however, that the company expects supply constraints to be a headwind to the gaming arm in the first quarter of fiscal 2027 and beyond, essentially confirming we're not going to see an RTX 5000 Super series anytime soon (or likely ever). The memory crisis that is ravaging the industry with shortages and high prices is showing no signs of abating.
In a later earnings call, an investor asked if Nvidia's gaming business can "still grow year-over-year," despite the memory shortage. "As much as we would love to have [...] more supply, we do believe for a couple quarters, it is going to be very tight," Kress said. "If things improve by the end of the year, there is an opportunity to think about what this is from a year-over-year growth, but it's still too early for us to know at this time."
Tesla, Microsoft, Alphabet, Meta, Apple, and Amazon – which, alongside Nvidia, are known collectively as the magnificent seven – have yet to see their stocks make gains this year. Nvida is the group's only exception. Its shares were up 3% in after-hours trading following the earnings report, although its gains fell to less than 1% as the day went on.
Amazon, Alphabet, Meta, and Microsoft are forecast to spend close to $700 billion on AI infrastructure this year. Nvidia said hyperscalers remained its largest customer category at slightly over 50% of data center revenue.
As budgets tilt toward infrastructure and automation, plenty of companies are trimming headcount – often explicitly tying reductions to AI-driven efficiency or restructuring. We've heard plenty of warnings about what's to come, including an apocalypse for white-collar positions. Huang disagrees, of course.
For Nvidia, though, the message to investors is simple: whether this cycle ends as a gold rush or a bubble that will burst like no other in history, the company selling the pickaxes is still printing money.