To The Moon

In my pre-earnings analysis, I forecasted NVIDIA ( $NVIDIA(NVDA)$ ) would ride its AI dominance to another standout quarter, with the Blackwell platform’s rollout potentially sparking a 5–10% stock surge if guidance quelled fears around DeepSeek’s rise and supply hiccups. The Q4 fiscal 2025 results, unveiled after market close on February 26, 2025, delivered: revenue hit a record $39.3 billion, topping the $38.04 billion consensus by 3.3%, and EPS landed at $0.89 (GAAP and non-GAAP), beating $0.84 by 6%. Yet, by 18:28 ET—post-conference call—the stock dipped 0.12% to $131.12 in after-hours trading, down $0.14 from a $131.28 regular-session close (up 3.7% intraday). Below, we unpack the earnings, outlook, leadership’s take, and why the market yawned.

Q4 Earnings Summary

NVIDIA’s Q4 (ended January 26, 2025) shattered records: revenue soared 78% year-over-year from $22.1 billion to $39.3 billion, up 12% from Q3’s $35.1 billion. Data Center led with $35.6 billion—up 93% year-over-year and 16% sequentially—driven by Blackwell’s $11 billion debut, the fastest product ramp in company history. Compute revenue hit $32.6 billion (up 116%), though networking slipped 9% to $3.0 billion amid a shift to Spectrum-X. Gaming faltered at $2.5 billion (down 11% year-over-year, 22% from Q3) due to Blackwell and Ada supply constraints, while Professional Visualization rose 10% to $511 million, and Automotive surged 103% to $570 million. Full-year revenue doubled to $130.5 billion (up 114%), with GAAP EPS at $2.94 (up 147%) and non-GAAP at $2.99 (up 130%). Gross margins dipped—73.0% GAAP, 73.5% non-GAAP—reflecting costlier Data Center systems, and operating expenses climbed 48% to $4.7 billion GAAP, fueled by R&D and staffing.

Q1 2026 Outlook Highlights

NVIDIA projects $43 billion in Q1 revenue (±2%), a 9.4% jump from Q4, outpacing the $42 billion analyst whisper. GAAP and non-GAAP gross margins are expected at 70.6% and 71.0%, respectively—down from Q4’s 73.0% and 73.5%—as complex systems persist. Operating expenses rise to $5.2 billion GAAP and $3.6 billion non-GAAP, signalling heavy investment. Other income is pegged at $400 million (excluding equity gains), with tax rates at 17% (±1%). This bullish outlook hinges on the Data Centre’s momentum, though tighter margins and costs hint at a balancing act.

Leadership Commentary

CEO Jensen Huang doubled down on AI’s trajectory: “Demand for Blackwell is amazing… AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave.” He touted billions in Blackwell sales and massive-scale production, framing it as a cornerstone for “reasoning AI” and smarter models. CFO Colette Kress echoed this, noting Blackwell’s $11 billion Q4 haul—the “fastest ramp in our history”—with cloud providers driving 50% of Data Center revenue. She acknowledged headwinds: export curbs to China pose “ongoing uncertainty,” and Gaming’s supply woes hit Q4. On margins, Kress pinned the dip on “more complex, higher-cost systems,” but highlighted yearly gains (75.5% non-GAAP vs. 73.8% in 2024) from Data Center’s mix. Both exuded confidence in the $43 billion outlook, tying it to hyperscaler demand (e.g., Meta’s $65B, Amazon’s $100B capex).

Stock Reaction and Market Sentiment

Despite the beat, NVDA’s slight dip to $131.12 (from $131.28) post-call—after a fleeting 0.14% gain at 16:53 ET—falls short of our 5–8% surge prediction and historical 4–5% gains (e.g., Q3’s 4% faded to -7%). Options priced an 8% swing (±$11 from ~$140 pre-monthly drop), yet this move barely dents the -2.46% downside threshold ($127.06). The slide suggests “sell the news” or unease over Gaming, margins, and export risks outweighing Blackwell’s glow.

Overall Comments

NVIDIA’s Q4 reaffirms its AI throne—$35.6B Data Center revenue and $11B from Blackwell alone dwarf peers like AMD ($2–3B Data Center) and Intel ($1B-ish)—and the $43B outlook bets on sustained demand. But the stock’s tepid reaction reflects a market wrestling with nuance: Gaming’s stumble, margin pressure, and geopolitical clouds temper the beat’s shine. A 12% monthly drop from DeepSeek fears ($148 to $130-ish) and 61% yearly gain (TradingView) frame this as profit-taking, not panic—on a $3.29 trillion market cap, $15 billion down is noise. After-hours runs to 8:00 PM ET (12:00 PM AEDT); pre-market (8:00 PM AEDT) and Friday’s open will test if this holds or flips. Our call underestimated caution—patience now is key as analysts (17/18 “buy,” $175 target) and X chatter digest the call.

@TigerWire