Nvidia Investors Offer Cautious Response to Optimistic Earnings Outlook

Nvidia Corp. Fails to Impress Investors with Latest Sales Forecast

Nvidia, the dominant maker of artificial intelligence processors, delivered a first-quarter outlook that easily beat the average Wall Street estimate, but its shares fell as much as 1.5% during a conference call with analysts. The stock was little changed by Wednesday evening.

The company's skepticism is due to concerns about an overheated AI economy, which has led to explosive sales growth and made Nvidia the world's most valuable company. To address these concerns, Chief Executive Officer Jensen Huang argued that customers are already making money from their newly acquired computing power, which will drive continued investment at elevated levels.

Chief Financial Officer Colette Kress attempted to defuse concerns about supply constraints, stating that the company has secured enough components to meet growing demand. However, she acknowledged that producing Nvidia's most advanced chips is a challenge, but the company's current Blackwell lineup and upcoming Rubin will still beat earlier sales projections.

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Nvidia previously predicted that the chips would generate $500 billion by the end of 2026. The company also secured a small-scale license to ship H200 processors to China, but Nvidia does not know if the Chinese government will grant its approval.

Fiscal first-quarter revenue will be approximately $78 billion, surpassing the average prediction of $72.8 billion. The company's data center unit, which is responsible for its industry-leading AI accelerator and networking products, had revenue of $62.3 billion in the quarter, compared to an average analyst estimate of $60.4 billion.

However, other areas were not as strong, with Gaming generating $3.73 billion in sales, below the average estimate of $4.01 billion. Automotive-related sales were $604 million, below the predicted $643 million.

Key Figures:

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• Revenue: $78 billion (Q1)
• Average analyst estimate: $72.8 billion (Q1)
• Data center unit revenue: $62.3 billion (Q1)
• Gaming revenue: $3.73 billion (Q1)
• Automotive-related sales: $604 million (Q1)
• Adjusted gross margin: 75.2% (Q4)
• Profit: $1.62 a share (Q4)