Nvidia Crushes Earnings Expectations as AI Chip Demand Fuels Massive Data Center Growth

Nvidia just delivered another blowout earnings report, handily beating Wall Street’s expectations and showcasing the unstoppable momentum of its AI-driven data center business. The company’s stock jumped about 6% in after-hours trading on the news.

Key Numbers at a Glance:

• Earnings per share (adjusted): $0.96 vs. $0.93 expected
• Revenue: $44.06 billion vs. $43.31 billion expected
• Net income: $18.8 billion, up 26% from $14.9 billion a year ago
• Data center revenue: $39.1 billion, up 73% year-over-year
• Overall revenue growth: 69% year-over-year

AI Boom Keeps Driving Nvidia’s Growth

The driving force behind Nvidia’s monster quarter? Its booming data center division — fueled by surging global demand for AI infrastructure. That segment alone accounted for a staggering 88% of total revenue.

CEO Jensen Huang called out the strong momentum, stating, “Global demand for Nvidia’s AI infrastructure is incredibly strong,” noting widespread deployment of its chips for training and running AI applications like ChatGPT.

Big cloud providers are leading the charge. Nvidia’s CFO Colette Kress highlighted that Microsoft has already deployed “tens of thousands” of Nvidia’s new Blackwell GPUs and plans to scale to “hundreds of thousands” in partnership with OpenAI.

Setback in China, but Outlook Still Strong

Despite the strong performance, Nvidia faced a major headwind in China. A U.S. export ban on its H20 chips — part of the Hopper family — forced the company to write down $4.5 billion in excess inventory and cost it an estimated $2.5 billion in lost sales this quarter.

Huang didn’t mince words: “The $50 billion market in China for AI chips is effectively closed to U.S. industry,” he said. “The H20 export ban ended our Hopper data center business in China.”

Nvidia’s gross margin took a hit as a result, coming in at 61%. Without the China-related write-down, it would’ve been 71.3%.

Looking ahead, Nvidia expects about $45 billion in sales next quarter — slightly below analyst forecasts of $45.9 billion. Without the China disruption, the company said its guidance would’ve been $8 billion higher.

Other Business Segments See Solid Growth

• Gaming: Still a major contributor, gaming revenue rose 42% year-over-year to $3.8 billion. Nvidia’s gaming chips continue to find use in both gaming consoles (like the upcoming Nintendo Switch 2) and AI applications.
• Automotive and Robotics: This segment surged 72% to $567 million, driven by growing adoption of Nvidia’s chips and software for autonomous vehicles.
• Professional Visualization: Revenue from this business, which includes Nvidia’s DGX Spark and DGX Station desktops, grew 19% to $509 million.

Shareholder Returns

Nvidia also returned capital to shareholders in a big way — spending $14.1 billion on share buybacks and paying out $244 million in dividends during the quarter.

Bottom Line

Even with geopolitical roadblocks, Nvidia’s growth story shows no signs of slowing down. The AI gold rush is real, and Nvidia continues to dominate the field with unmatched momentum — a fact investors clearly noticed as shares climbed to their highest level in four months, now sitting less than 5% below the all-time high.