Blackwell AI drives $11B revenue, but Nvidia shares plunge on outlook
Nvidia shares fell more than 8% to $123, bringing its market capitalization below $3 trillion, as investors were disappointed by the company’s gross margin forecast for Q1 2025.
While Nvidia’s Q4 2024 revenue of $39.3 billion and EPS of $0.89 exceeded Wall Street expectations, the projected 71% gross margin for the next reporting period fell short of the 72.1% consensus estimate.
NVIDIA stock price dynamics for 5 days. Source: TradingView
Nvidia expects total Q1 revenue of $43 billion (+/-2%), slightly above analyst projections of $42.3 billion. However, investors had hoped for stronger guidance.
"Investors are yawning," wrote Truist Securities analyst William Stein in a late Wednesday investor note, despite the revenue beat.
Benchmark analyst Cody Acree told Yahoo Finance that Nvidia’s gross margin outlook is a concern, signaling pricing pressure and growing competition.
Exceptional success despite manufacturing challenges
In the last quarter, Nvidia generated $11 billion in revenue from its Blackwell AI GPUs, marking the fastest product ramp in the company’s history, according to CFO Colette Kress. Nvidia had initially expected only a few billion dollars in Q4 sales from Blackwell.
Concerns had emerged about design flaws, overheating issues, and failures in GB200 server racks that could slow production and lead to order cuts from customers. However, these issues were resolved, and CEO Jensen Huang confirmed that "demand for Blackwell is extraordinary."
Still, Nvidia appears to be factoring in potential sales declines in China due to tariffs and supply restrictions. In January, its stock took a hit following reports that the Trump administration plans to tighten chip export controls to China.
"A 71% gross margin might seem like nitpicking, but we won’t argue that product rollout is the main priority right now, given that demand remains off the charts," wrote Bernstein analyst Stacy Rasgon.
Other analysts echoed similar sentiments, affirming that NVDA’s flagship products will continue to face demand far exceeding supply throughout 2025.
As we wrote, Nvidia (NVDA) stock regained some ground Tuesday, rising as much as 2.6% in premarket trading before paring gains to less than 1% after the market opened.
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