From Yahoo Finance, February 27:
Only in the world of AI darling Nvidia (NVDA) are hypersonic growth rates not seemingly enough for the beloved stock's bulls.
Shares of the $3.2 trillion market cap chipmaker had reversed losses and were up nearly 3% in premarket trading on Thursday as investors digested a host of Nvidia earnings headlines.
In its earnings release on Wednesday evening, Nvidia said it expects gross profit margins of 70.6% to 71% in the first quarter as it contends with the production ramp-up of its new Blackwell chip.
The margin outlook of 71% is "a little concerning," Benchmark Company managing director and senior research analyst Cody Acree said on Yahoo Finance's Market Domination. "I think that's indicative of more pricing pressure, more competition from AMD (AMD), and more price sensitivity at their customers as they're investing their own dollars to create their own ASICs [application specific integrated circuits]."
Shares of chip rivals AMD (AMD), Broadcom (AVGO), and Qualcomm (QCOM) rose slightly in premarket trading.
Listen: why Nvidia may be unstoppable
Nvidia execs sought to push back on the bears on its earnings call. The bears have put forth a narrative that there will be a digestion period for AI investments by hyperscalers such as Amazon (AMZN) and Nvidia's margins may have peaked.
"We're going to have to continue to scale as demand is quite high, and customers are anxious and impatient to get their Blackwell systems," Nvidia founder and CEO Jensen Huang said. Huang teased several new powerful chips set to be unveiled at the company's March 17 GTC conference.
Added CFO Colette Kress: "Once our Blackwell fully rounds, we can improve our cost and our gross margin. So, we expect to probably be in the mid-70s later this year."
Lost in the intense focus on the outlook was another strong quarter from Nvidia.
Quarterly revenue rose 12% sequentially and 78% from the prior year. Datacenter sales more than doubled from the prior year. Earnings handily beat analyst estimates.
Here is what Wall Street is saying about Nvidia's quarter and outlook.
Citi analyst Atif Malik
Rating: Reiterated Buy
Price Target: $163, reiterated
"Blackwell sales of $11 billion exceeded expectations (Citi $10 billion) as ramp seems to be on track now after hiccups last year and Nvidia expects strong growth in 2025. Inference demand is accelerating post reasoning models like DeepSeek as long reasoning requires 100x more compute per task vs one shot inference. While GTC is typically a catalyst for the stock, overhang of potential new China restrictions, semis tariffs, and gross margins will likely keep the stock range bound in the near term. For long-term investors willing to look through these concerns, valuation looks attractive at 23 times calendar year EPS and stock offers an attractive entry point."
HSBC analyst Ryan Mellor
Rating: Reiterated Buy
Price Target: $175, reiterated
"Management did not give an explicit first quarter Blackwell revenue target but we raise our Blackwell revenue higher to $20 billion (from $10 billion)....
....MUCH MORE
As the article points out the stock reversed yesterday's after-hours decline (down $1.96) and is currently trading up $3.18 (+2.43%) at $134.46.
Previously: Nvidia Q4 2025 Earnings Call Transcript (NVDA)
