NVIDIA Q4 2025 Earnings Call Briefing Document

Date: March 1, 2025

Source: NVIDIA Corporation (NVDA) Q4 2025 Earnings Call Transcript | Seeking Alpha (Feb. 26, 2025)

Executive Summary:

NVIDIA reported a record Q4 2025, driven by exceptional demand for its data center products, particularly the new Blackwell architecture. Revenue reached $39.3 billion, a 78% year-over-year increase. The company is experiencing rapid growth in data center revenue due to AI adoption across various industries. While gaming revenue was down sequentially due to supply constraints, the company anticipates a strong rebound in Q1. NVIDIA is navigating a complex product ramp with Blackwell, focusing on maximizing output to meet customer demand. Future growth is expected to be fueled by advances in AI reasoning, new markets such as enterprise Agentic AI and Physical AI and the ongoing shift towards accelerated computing.

Key Themes and Ideas:

• Record Financial Performance: NVIDIA’s Q4 was a record-breaking quarter, driven by strong data center growth. “Revenue of $39.3 billion was up 12% sequentially and up 78% year-on-year”. Full-year revenue reached $130.5 billion, marking a 114% increase year-over-year.
• Data Center Dominance: Data center revenue continues to be the primary growth driver, with full-year revenue more than doubling to $115.2 billion. Q4 data center revenue hit a record $35.6 billion, up 93% year-on-year. “As the Blackwell ramp commenced and Hopper 200 continued sequential growths.”
• Blackwell’s Rapid Ramp: The Blackwell architecture’s ramp is exceeding expectations. “We delivered $11 billion of Blackwell revenue to meet strong demand. This is the fastest product ramp in our company’s history, unprecedented in its speed and scale.” Blackwell is designed to address the entire AI market, from pre-training to inference.
• AI Inference Demand Surge: Inference is becoming a significant driver of demand, particularly with the rise of reasoning AI models. “Our inference demand is accelerating, driven by test time scaling and new reasoning models like OpenAI’s o3, DeepSeek-R1, and Grok-3.” Blackwell is architected to excel in reasoning AI inference, offering significantly higher throughput and lower costs compared to previous generations.
• The Rise of Reasoning AI and Scaling Laws: Jensen Huang emphasized the emergence of new “scaling laws” beyond pre-training, including post-training (fine-tuning, reinforcement learning) and inference time scaling (reasoning, long-thinking AI). “There are now multiple scaling laws. There’s the pre-training scaling law… the second is post-training scaling law… the third part, this is the part that you mentioned is test time compute or reasoning, long thinking, inference scaling.” These scaling laws are driving increased demand for compute.
• Networking as a Growth Vector: NVIDIA sees networking, specifically NVLink Switch and Spectrum-X, as a major new growth area. “Spectrum-X and NVLink Switch revenue increased and represents a major new growth vector. We expect networking to return to growth in Q1.” The company is transitioning to larger NVLink configurations and expanding Ethernet solutions for AI computing.
• Gaming Rebound Expected: Gaming revenue declined sequentially due to supply constraints. “Gaming revenue of $2.5 billion decreased 22% sequentially and 11% year-on-year…However, Q4 shipments were impacted by supply constraints. We expect strong sequential growth in Q1 as supply increases.” The launch of the GeForce RTX 50 Series GPUs is anticipated to drive future growth.
• Automotive Sector on the Rise: Automotive revenue reached a record, driven by autonomous vehicle development. “Revenue was a record $570 million, up 27% sequentially and up 103% year-on-year.” NVIDIA’s automotive vertical revenue is expected to grow to approximately $5 billion this fiscal year.
• Gross Margin Management: Gross margins are expected to be in the low 70s during the Blackwell ramp, with opportunities to improve margins later in the year as production scales and costs are optimized. “As Blackwell ramps, we expect gross margins to be in the low 70s…When fully ramped, we have many opportunities to improve the cost and gross margin will improve and return to the mid-70s, late this fiscal year.”
• Geographic Dynamics: The U.S. saw the strongest sequential growth in data center revenue, driven by the initial Blackwell ramp. China revenue remained below levels seen before export controls. “Now as a percentage of total Data Center revenue, data center sales in China remained well below levels seen on the onset of export controls.”
• The Power of General-Purpose Architecture: Jensen Huang defended NVIDIA’s general-purpose architecture against the rise of custom ASICs. “NVIDIA’s architecture is general…We’re great on all of it because our software stack is so – our architecture is sensible, our software stack ecosystem is so rich.” He emphasized the advantages of generality, end-to-end capabilities, pervasive reach, fast performance rhythm, and a robust software stack.

Forward Guidance:

• Q1 2026 revenue is expected to be $43 billion, plus or minus 2%.
• Sequential growth is expected in both Data Center and Gaming.
• GAAP gross margin is expected to be 70.6% and non-GAAP gross margin is expected to be 71%, plus or minus 50 basis points.
• Full-year fiscal year ’26 operating expenses are expected to grow to be in the mid-30s.

Key Quotes:

• “With Blackwell, it will be common for these clusters to start with 100,000 GPUs or more.”
• “Blackwell was architected for reasoning AI inference. Blackwell supercharges reasoning AI models with up to 25 times higher token throughput and 20 times lower cost versus Hopper 100. It is revolutionary.”
• “AI is evolving beyond perception and generative AI into reasoning…We are at the beginning of reasoning AI and inference time scaling. But we are just at the start of the age of AI, multimodal AIs, enterprise AI sovereign AI and physical AI are right around the corner.”
• “No technology has ever had the opportunity to address a larger part of the world’s GDP than AI. No software tool ever has.”

Potential Risks and Concerns:

• Gross Margin Pressure: Blackwell’s ramp is expected to put pressure on gross margins in the short term.
• Supply Chain Complexity: The complexity of manufacturing Blackwell systems presents challenges in scaling production.
• Geopolitical Risks: Export controls and tariffs could impact NVIDIA’s business in specific regions.
• Customer Concentration: A significant portion of NVIDIA’s revenue comes from a limited number of customers, creating potential risk if those relationships change.
• Competition from ASICs: The rise of custom ASICs could potentially challenge NVIDIA’s dominance in certain markets.

Overall Assessment:

NVIDIA’s Q4 2025 results showcase the company’s continued leadership in the accelerated computing and AI market. The Blackwell architecture is experiencing rapid adoption, and the company is well-positioned to capitalize on the growing demand for AI infrastructure across various industries and applications. While gross margin pressures and geopolitical risks remain concerns, NVIDIA’s innovative culture and strategic vision make it a compelling player in the technology landscape. The emphasis on new AI scaling laws, the enterprise agentic AI market and the physical AI sector will continue to be critical drivers of the company’s success.