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NVIDIA is a leader in accelerated computing, initially focusing on PC graphics and expanding into various fields such as scientific computing, AI, data science, autonomous vehicles, robotics, and 3D internet applications . The company operates through two main segments: "Compute & Networking" and "Graphics" . NVIDIA's platforms address four major markets: Data Center, Gaming, Professional Visualization, and Automotive, with significant growth driven by the adoption of generative AI and accelerated computing .
- Compute & Networking - Develops and provides data center platforms and AI software, focusing on accelerated computing and generative AI applications.
- Graphics - Produces GPUs for gaming and professional visualization, enhancing visual experiences and computational capabilities.
- Data Center - Offers solutions for data-intensive applications, supporting AI, data science, and scientific computing needs.
- Gaming - Designs and manufactures GPUs and related technologies to enhance gaming experiences.
- Professional Visualization - Provides advanced graphics solutions for professionals in fields such as design, animation, and simulation.
- Automotive - Develops automotive solutions, including technologies for autonomous vehicles and advanced driver-assistance systems.
What went well
- NVIDIA's demand for its new Blackwell GPUs is staggering, with next-generation foundation models starting at 100,000 Blackwells, indicating strong future growth potential.
- The company expects no slowdown until it modernizes $1 trillion worth of data centers, driven by the shift from CPU to GPU computing for AI and machine learning workloads.
- NVIDIA is positioned to capitalize on the rise of AI-native companies and the growing demand for inference computing, as it is the largest inference platform in the world with a large installed base and robust ecosystem.
What went wrong
- Supply constraints in gaming and data center segments may limit revenue growth. NVIDIA's gaming revenue is expected to decline sequentially in Q4 due to supply constraints, despite strong demand. Additionally, the complexity of building Blackwell systems, involving seven different custom chips, may lead to supply chain challenges impacting the ramp-up.
- Near-term gross margin pressure due to ramping new products. As NVIDIA ramps up Blackwell, gross margins are expected to moderate to the low 70s from mid-70s, potentially affecting profitability in the near term.
- Regulatory and geopolitical risks may impact business in China. Changes in U.S. administration and potential new export controls could affect NVIDIA's operations in China. The company anticipates the market in China to remain very competitive and will continue to comply with export controls while serving customers.
Q&A Summary
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Gross Margin Outlook
Q: Can NVIDIA recover gross margins to mid-70s% in 2025?
A: Colette Kress believes reaching mid-70s% gross margins in the second half of next year is a reasonable goal, depending on the product mix and ramp. -
Blackwell Ramp and Supply
Q: How is the Blackwell production and supply ramp progressing?
A: Jensen Huang stated that Blackwell production is in full swing, exceeding previous estimates by delivering more units this quarter. Despite demand exceeding supply, they are increasing production with supply chain partners and are on track with their annual roadmap. -
Hopper and Blackwell Demand
Q: Will Hopper shipments decline as Blackwell ramps up?
A: Colette Kress mentioned that Hopper demand remains strong, and they will continue selling Hopper in Q4 across all configurations, including China. Customers are also building out Blackwell, so both products will be available, and it's possible for Hopper to grow between Q3 and Q4. -
No Expected Digestion Period
Q: Is a digestion period expected in hardware deployments?
A: Jensen Huang believes there will be no digestion period until the world's $1 trillion data centers are modernized for machine learning and generative AI, anticipating continuous growth over the next several years as they build out AI infrastructure. -
Gross Margins During Blackwell Ramp
Q: Will gross margins decline during the Blackwell ramp?
A: Colette Kress expects gross margins to be in the low 70s% during the initial Blackwell ramp due to new configurations and chips, but aims to reach the mid-70s% quite quickly in subsequent quarters as they improve yields and product mix. -
Inference Market Growth
Q: How does NVIDIA view the growth of the inference market?
A: Jensen Huang sees significant growth potential in inference as AI adoption expands. He aims for widespread 24/7 inference usage across industries, including AI-native startups, and notes that applications requiring high throughput and low latency benefit from NVIDIA's architecture. -
Networking Business Outlook
Q: What is happening with the Networking business?
A: Colette Kress explained that despite a slight sequential decline, networking is growing year-over-year and is critical to data center operations. They expect growth to resume as they prepare for Blackwell and more systems incorporating NVIDIA's networking solutions. -
Sovereign AI Demand
Q: What is the status of sovereign AI demand?
A: Colette Kress stated that sovereign AI demand remains strong, with the pipeline intact as countries build foundational models in their own languages and cultures. This leads to growth opportunities in Europe and Asia Pacific. -
Gaming Supply Constraints
Q: Are supply constraints affecting the Gaming segment?
A: Colette Kress noted tightness in gaming supply due to rapid sell-through and efforts to ramp all products. They expect to be back on track with more supply in the new calendar year but will be tight for the current quarter. -
Scaling of Large Language Models
Q: Is scaling of large language models stalling?
A: Jensen Huang stated that foundation model pretraining scaling continues, and they've discovered new ways to scale through post-training and inference-time scaling. This drives greater demand for their infrastructure, including Blackwell.
Guidance Changes
Quarterly guidance for Q4 2025:
- Total Revenue: $37.5 billion, plus or minus 2% (raised from $32.5 billion, plus or minus 2% )
- GAAP Gross Margin: 73%, plus or minus 50 basis points (lowered from 74.4%, plus or minus 50 basis points )
- Non-GAAP Gross Margin: 73.5%, plus or minus 50 basis points (lowered from 75%, plus or minus 50 basis points )
- GAAP Operating Expenses: $4.8 billion (raised from $4.3 billion )
- Non-GAAP Operating Expenses: $3.4 billion (raised from $3.0 billion )
- GAAP and Non-GAAP Other Income and Expenses: $400 million (raised from $350 million )
- GAAP and Non-GAAP Tax Rates: 16.5%, plus or minus 1% (lowered from 17%, plus or minus 1% )
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Given the 15% sequential decline in the networking business despite stating strong demand and multiple cloud design wins, can you unpack the underlying issues in the Networking segment, including any constraints or challenges with Spectrum-X's growth to multiple billions?
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With the debate around scaling large language models potentially stalling, how is NVIDIA assisting customers to overcome these scaling challenges, and is this situation driving even greater demand for Blackwell?
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Can you provide a detailed breakdown of the compute resources allocated to pretraining, reinforcement learning, and inference in AI workloads, and where do you see the most significant growth occurring among these segments?
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Historically, hardware deployment cycles have included periods of digestion; when do you anticipate this phase occurring for NVIDIA, and how many quarters of shipments are required to satisfy the initial demand for Blackwell, considering plans to grow into calendar '26?
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In light of reports about heating issues following the mass change earlier this year, can you address concerns regarding NVIDIA's ability to execute the roadmap as presented, including the upcoming releases of Ultra and the transition to Ruben in 2026?
Q3 2025 Earnings Call
- Issued Period: Q3 2025
- Guided Period: Q4 2025
- Guidance:
- Total Revenue: Expected to be $37.5 billion, plus or minus 2% .
- GAAP Gross Margin: Expected to be 73%, plus or minus 50 basis points .
- Non-GAAP Gross Margin: Expected to be 73.5%, plus or minus 50 basis points .
- GAAP Operating Expenses: Expected to be approximately $4.8 billion .
- Non-GAAP Operating Expenses: Expected to be approximately $3.4 billion .
- GAAP and Non-GAAP Other Income and Expenses: Expected to be an income of approximately $400 million, excluding gains and losses from nonaffiliated investments .
- GAAP and Non-GAAP Tax Rates: Expected to be 16.5%, plus or minus 1%, excluding any discrete items .
Q2 2025 Earnings Call
- Issued Period: Q2 2025
- Guided Period: Q3 2025
- Guidance:
- Total Revenue: Expected to be $32.5 billion, plus or minus 2% .
- GAAP Gross Margins: Expected to be 74.4%, plus or minus 50 basis points .
- Non-GAAP Gross Margins: Expected to be 75%, plus or minus 50 basis points .
- GAAP Operating Expenses: Expected to be approximately $4.3 billion .
- Non-GAAP Operating Expenses: Expected to be approximately $3.0 billion .
- GAAP and Non-GAAP Other Income and Expenses: Expected to be about $350 million .
- GAAP and Non-GAAP Tax Rates: Expected to be 17%, plus or minus 1%, excluding any discrete items .
- Full Year Gross Margins: Expected to be in the mid-70% range .
- Full Year Operating Expenses: Expected to grow in the mid- to upper 40% range .
Q1 2025 Earnings Call
- Issued Period: Q1 2025
- Guided Period: Q2 2025
- Guidance:
- Total Revenue: Expected to be $28 billion, plus or minus 2% .
- GAAP Gross Margin: Expected to be 74.8%, plus or minus 50 basis points .
- Non-GAAP Gross Margin: Expected to be 75.5%, plus or minus 50 basis points .
- GAAP Operating Expenses: Expected to be approximately $4 billion .
- Non-GAAP Operating Expenses: Expected to be approximately $2.8 billion .
- Full Year Operating Expenses Growth: Expected to grow in the low 40% range .
- GAAP and Non-GAAP Other Income and Expenses: Expected to be an income of approximately $300 million, excluding gains and losses from nonaffiliated investments .
- GAAP and Non-GAAP Tax Rates: Expected to be 17%, plus or minus 1%, excluding any discrete items .
Q4 2024 Earnings Call
- Issued Period: Q4 2024
- Guided Period: Q1 2025
- Guidance:
- Total Revenue: Expected to be $24 billion, plus or minus 2% .
- GAAP Gross Margins: Expected to be 76.3%, plus or minus 50 basis points .
- Non-GAAP Gross Margins: Expected to be 77%, plus or minus 50 basis points .
- GAAP Operating Expenses: Expected to be approximately $3.5 billion .
- Non-GAAP Operating Expenses: Expected to be approximately $2.5 billion .
- GAAP and Non-GAAP Other Income and Expenses: Expected to be an income of approximately $250 million, excluding gains and losses from non-affiliated investments .
- GAAP and Non-GAAP Tax Rates: Expected to be 17%, plus or minus 1%, excluding any discrete items .
- Additionally, they mentioned that beyond Q1, for the remainder of the year, they expect gross margins to return to the mid-70s percent range .
Competitors mentioned in the company's latest 10K filing.
- Advanced Micro Devices, Inc. (AMD) - Competitor in hardware and software for discrete and integrated GPUs, custom chips, and other accelerated computing solutions, including AI solutions .
- Huawei Technologies Co. Ltd. (Huawei) - Competitor in hardware and software for discrete and integrated GPUs, custom chips, and other accelerated computing solutions, including AI solutions .
- Intel Corporation (Intel) - Competitor in hardware and software for discrete and integrated GPUs, custom chips, and other accelerated computing solutions, including AI solutions .
- Alibaba Group - Large cloud services company with internal teams designing hardware and software that incorporate accelerated or AI computing functionality .
- Alphabet Inc. - Large cloud services company with internal teams designing hardware and software that incorporate accelerated or AI computing functionality .
- Amazon, Inc. - Large cloud services company with internal teams designing hardware and software that incorporate accelerated or AI computing functionality .
- Baidu, Inc. - Large cloud services company with internal teams designing hardware and software that incorporate accelerated or AI computing functionality .
- Microsoft Corporation (Microsoft) - Large cloud services company with internal teams designing hardware and software that incorporate accelerated or AI computing functionality .
- Ambarella, Inc. - Supplier of hardware and software for SoC products used in servers or embedded into automobiles, autonomous machines, and gaming devices .
- Broadcom Inc. (Broadcom) - Supplier of hardware and software for SoC products used in servers or embedded into automobiles, autonomous machines, and gaming devices .
- Qualcomm Incorporated - Supplier of hardware and software for SoC products used in servers or embedded into automobiles, autonomous machines, and gaming devices .
- Renesas Electronics Corporation - Supplier of hardware and software for SoC products used in servers or embedded into automobiles, autonomous machines, and gaming devices .
- Samsung - Supplier of hardware and software for SoC products used in servers or embedded into automobiles, autonomous machines, and gaming devices .
- Tesla, Inc. - Company with internal teams designing SoC products for their own products and services .
- Arista Networks - Competitor in networking products consisting of switches, network adapters (including DPUs), and cable solutions .
- Cisco Systems, Inc. - Competitor in networking products consisting of switches, network adapters (including DPUs), and cable solutions .
- Hewlett Packard Enterprise Company - Competitor in networking products consisting of switches, network adapters (including DPUs), and cable solutions .
- Lumentum Holdings - Competitor in networking products consisting of switches, network adapters (including DPUs), and cable solutions .
- Marvell Technology Group - Competitor in networking products consisting of switches, network adapters (including DPUs), and cable solutions .
Recent developments and announcements about NVDA.
Financial Reporting
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Record Revenue: NVIDIA reported a record quarterly revenue of $35.1 billion, which is a 17% increase from the previous quarter and a 94% increase from the same period last year .
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Data Center Performance: The Data Center segment also achieved record revenue of $30.8 billion, marking a 17% increase from the previous quarter and a 112% increase year-over-year. This growth was driven by strong demand for NVIDIA's Hopper computing platform, which is used for training and inferencing large language models and other AI applications .
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Earnings Per Share: The GAAP earnings per diluted share were $0.78, up 16% from the previous quarter and 111% from the previous year. Non-GAAP earnings per diluted share were $0.81, reflecting a 19% increase from the previous quarter and a 103% increase year-over-year .
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Segment Revenue:
- Compute & Networking: Revenue was $31.0 billion, up 17% from the previous quarter and 112% year-over-year.
- Graphics: Revenue was $4.0 billion, up 13% from the previous quarter and 16% year-over-year.
- Gaming: Revenue was $3.3 billion, up 14% from the previous quarter and 15% year-over-year.
- Professional Visualization: Revenue was $486 million, up 7% from the previous quarter and 17% year-over-year.
- Automotive: Revenue was $449 million, up 30% from the previous quarter and 72% year-over-year .
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Outlook for Q4 FY2025: NVIDIA expects revenue for the fourth quarter of fiscal 2025 to be approximately $37.5 billion, with GAAP and non-GAAP gross margins expected to be around 73.0% and 73.5%, respectively .
Earnings Call
NVIDIA recently held its earnings call for the third quarter of fiscal 2025, where they reported a revenue of $35.1 billion, marking a 17% sequential increase and a 94% year-on-year growth, surpassing their outlook of $32.5 billion . The company's data center segment achieved record revenue of $30.8 billion, driven by exceptional demand for NVIDIA Hopper and the rapid ramp-up of NVIDIA H200 sales . NVIDIA's management provided forward guidance for the fourth quarter, expecting total revenue to be approximately $37.5 billion, plus or minus 2%, with GAAP and non-GAAP gross margins anticipated to be around 73% and 73.5%, respectively .
Key strategic initiatives include the ramp-up of Blackwell products, which are expected to exceed previous revenue estimates due to increased supply visibility . NVIDIA is focusing on AI infrastructure, with significant investments in data centers to support new product introductions . The company is also seeing strong demand for its AI platforms, with Blackwell systems being integrated into diverse data center configurations worldwide .
During the earnings call, analysts raised questions about the scaling of large language models and the demand for Blackwell, to which NVIDIA's CEO Jensen Huang responded by highlighting the continued scaling of foundation models and the introduction of new scaling methods like post-training and inference time scaling . The demand for NVIDIA's infrastructure remains high, driven by the growth of AI-native companies and enterprise adoption of AI technologies .
Analysts also inquired about NVIDIA's gross margin trajectory and the impact of Blackwell's ramp-up. Colette Kress, NVIDIA's CFO, indicated that gross margins could reach the mid-70s in the second half of the next year, depending on the product mix . The company is working to address supply constraints, particularly in the gaming segment, and expects to improve supply as they enter the new calendar year .
Overall, NVIDIA is experiencing robust growth across its market platforms, fueled by the adoption of accelerated computing and AI, and is well-positioned to capitalize on the ongoing AI revolution .
Earnings Report
NVIDIA's Third Quarter Fiscal 2025 Earnings Results
NVIDIA Corporation has announced its financial results for the third quarter of fiscal 2025, ending on October 27, 2024. Here are the key highlights from the earnings report:
These results highlight NVIDIA's strong performance across its various segments, driven by the increasing demand for AI and computing solutions. The company continues to see significant growth in its Data Center and Gaming segments, reflecting its strategic focus on AI and accelerated computing .