Nvidia (NVDA) stock seesawed in early trading Thursday after the company’s fourth quarter earnings topped Wall Street’s expectations but its outlook for first quarter gross margin came in lower than Wall Street expected.
As of 10:07:42 AM EST. Market Open.
Nvidia guided for gross margins of roughly 71% for the first quarter, lower than its 73% gross margin in the fourth quarter.
The chipmaker’s revenue of $39.3 billion and earnings per share of $0.89 topped Wall Street’s estimates, according to Bloomberg consensus estimates. Nvidia anticipates its total first quarter revenue will hit $43 billion, plus or minus 2%, above the $42.3 billion expected by Wall Street analysts.
“Despite the beat & raise, investors are yawning,” Truist Securities William Stein wrote in a note to investors late Wednesday.
Benchmark analyst Cody Acree told Yahoo Finance in an interview after Nvidia’s earnings release that its first quarter guidance for gross margins was slightly concerning, noting that it was indicative of pricing pressure and more competition. “I think that’s just the future that Nvidia has to live in, but demand for their products appears to be strong, and that’s really the key for Nvidia going forward,” he said.
Nvidia’s Blackwell AI GPUs [graphics processing units] contributed $11 billion to the company’s Q4 revenue in what CFO Colette Kress said was “the fastest product ramp in our company’s history.” Nvidia had previously said it expected Blackwell to contribute several billion dollars in sales in its fourth quarter.
That accomplishment comes after design flaws reportedly pushed Blackwell production back a quarter, and a report from the Information in January said overheating issues and glitches with its massive GB200 server racks with the Blackwell chips was prompting customers to cut orders, spurring fears of further delays ahead of Nvidia’s earnings report Wednesday.
But those fears were assuaged as the company said Blackwell is “fully ramped,” and CEO Jensen Huang said “demand for Blackwell is extraordinary.”
Stifel analyst Ruben Roy wrote in a note to investors late Wednesday: “[W]e believe the pace of the Blackwell ramp is notable given expectations for strong growth in F1Q following the strength seen in F4Q within the context of technical issues early in the production cycle.” Roy reiterated his Buy rating on Nvidia stock and maintained his $180 price target.
Truist Securities’ Stein added that Nvidia’s production accomplishment “de-risks the future ramps” of upcoming AI chips “by overcoming a transformation hurdle early.”
2025-02-27 14:51:00
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