Nvidia surpasses expectations with record Blackwell chip sales, yet stock remains suspiciously stagnant
By ljdevon // 2025-02-28
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Nvidia, the semiconductor giant at the forefront of the artificial intelligence (AI) revolution, has once again delivered a blockbuster earnings report, surpassing Wall Street expectations with record-breaking sales of its Blackwell chips. Despite the impressive financial performance, the company’s stock remained flat, reflecting a cautious market sentiment and heightened investor scrutiny as Nvidia navigates a critical transition period in its product lineup. The company reported fourth-quarter revenue of 39.33 billion. Adjusted earnings per share (EPS) came in at 89 cents, beating estimates of 84 cents. However, the stock’s lackluster response highlights the challenges Nvidia faces as it shifts from its Hopper architecture to the next-generation Blackwell platform, a move that has left investors wary of potential slowdowns in growth.

The rise of Blackwell and the AI boom

Nvidia’s Blackwell architecture, designed to power the next wave of AI supercomputers, has already generated $11 billion in revenue in its first quarter of availability. This marks the fastest product ramp in the company’s history, with large cloud service providers accounting for approximately 50% of data center revenue. The Blackwell chips are poised to revolutionize industries by enabling advanced AI applications, including agentic AI and physical AI, which are expected to drive the next phase of AI adoption. “We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter,” Nvidia stated in its earnings release. “AI is advancing at light speed, setting the stage for the next wave of AI to revolutionize the largest industries.” The company’s ability to overcome supply-chain delays and meet surging demand from hyperscalers like Microsoft, Amazon, and Google has been a key factor in its success. However, the heavy reliance on these tech giants has raised concerns among investors, who are eager to see AI adoption spread more broadly across the economy.

Challenges in networking and gross margins

While Nvidia’s data center and compute segments continue to shine, the company’s networking revenue declined by 9% year-over-year to $3.02 billion, missing estimates. This dip is attributed to the transition to new products, which has temporarily disrupted growth. Additionally, Nvidia’s non-adjusted gross margin is forecasted to narrow further, with the company predicting a non-GAAP gross margin of 71% for the current quarter, slightly below consensus estimates. Nvidia has assured investors that these challenges are temporary, emphasizing that the margin compression is a necessary cost of bringing cutting-edge products to market. “We expect margins to widen again as we fully transition to Blackwell and scale production,” the company noted in its CFO commentary. Suspicious market reaction Despite the strong earnings report, Nvidia’s stock remained stagnant in after-hours trading, a surprising outcome given the company’s history of triggering significant market moves with its earnings announcements. This muted response reflects a broader sense of caution among investors, who are closely monitoring the company’s ability to maintain its growth trajectory amid the transition to Blackwell and increasing competition in the AI space. “The numbers are impressive, but the market is clearly pricing in some uncertainty,” said Kunjan Sobhani, a Bloomberg Intelligence technology analyst. “The key question is whether Nvidia can sustain this level of growth as it moves from Hopper to Blackwell and beyond.” Nvidia’s latest earnings report highlights its dominant position in the AI industry, but it also shows the challenges of maintaining leadership in a rapidly evolving market. The company’s success in ramping up Blackwell production and securing billions in sales is a testament to its innovation and execution capabilities. However, the flat stock response serves as a reminder that even the most successful companies must navigate periods of uncertainty and transition. As Nvidia continues to push the boundaries of AI technology, its ability to adapt and innovate will be critical to its long-term success. The Blackwell platform represents a significant leap forward, but the true test will be whether Nvidia can sustain its momentum and deliver on the promise of revolutionizing industries through AI. With all its success and future prospects in the AI space, what is holding Nvidia's stock price down? Sources include: Zerohedge.com Zerohedge.com Enoch, Brighteon.ai
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