Nvidia’s stock was one of the stock market’s top performers in 2023 and 2024. However, gains have been harder to come by in 2025.
Worry has increased that government restrictions will crimp global sales growth, and hyperscalers’ demand from the likes of Amazon and Microsoft could wane.
Related: Analyst flags new quantum computing stocks to buy
As a result, Nvidia’s shares peaked in early April after delivering a staggering 171% return in 2024, retreating 37% through early April before finding their footing after President Trump paused implementing most of his reciprocal tariffs on April 9.
The past six weeks’ rally in Nvidia shares has caught many investors expecting tailwinds to ding revenue and profit growth off guard.
Shares have gained over 50% since bottoming in April, and based on investors’Â early reaction to Nvidia’s first quarter earnings results, it appears that isn’t changing.
Image source: Morris/Bloomberg via Getty Images
Nvidia continues to dominate the AI chip market
Nvidia was best known for making premium graphic processing units, or GPUs, used in video gaming consoles and PCs. Then, it won fans among the cryptocurrency crowd when they discovered its GPUs were ideally suited for mining Bitcoin and other digital currencies.
Nowadays, demand from those areas pales in comparison to the tidal wave of demand for its GPUs from companies investing in artificial intelligence.
Related: Billionaire fund manager dumps Tesla in favor of other tech stock
Banks are using AI to hedge risks. Retailers are exploring AI to manage inventory and crimp theft. Healthcare companies are exploring its use in drug development. Manufacturers are using it to improve quality and supply chains. Even the U.S. government is exploring AI use on the battlefield.
The flurry of activity followed the massively successful launch of OpenAI’s large language model, ChatGPT in 2022. ChatGPT was the fastest app to reach one million users, and its rapid adoption sparked significant interest in developing competing AI chatbots, including Google’s Gemini.
In addition to the millions of people who are using AI chatbots to improve search and create content, businesses are plowing big money into agentic AI assistants that can help streamline many business processes.
Altogether, the interest in training and operating AI solutions has fueled a tsunami of spending on network infrastructure, including Nvidia’s GPUs.Â
Nvidia’s annual revenue has surged to $130 billion from $17 billion in 2021 thanks to AI demand, and that’s been a boon to its bottom line. The company’s earnings per share totaled $2.94 last year, up 130% year over year.
AI spending may be peaking, but sales and profit surged again in Q1
Hyperscalers like Meta, Alphabet, Amazon, and Microsoft have ramped spending over the past two years to make sure their cloud networks can handle all their customers AI activity.Â
As a result, Microsoft, Google, and Amazon alone forked out $192 million on the stuff necessary to build their businesses in 2024, up from capital expenditures of $117 billion in 2023.
AI spending is expected to climb again this year, but many think that spending growth is peaking thanks to the law of large numbers. In 2025, Meta, Google, Amazon, and Microsoft capex is forecast growing 41%, down from 59% growth in 2024.
TheStreet, Company earnings reports and commentary.
Nevertheless, growth is growth, and even with tightening restrictions on sales of next-gen GPUs to China, Nvidia delivered impressive fiscal first-quarter results.
More Nvidia:
- Analysts issue rare warning on Nvidia stock before key earnings
- Analysts double price target of new AI stock backed by Nvidia
- Nvidia CEO shares blunt message on China chip sales ban
Total quarterly revenue grew 12% sequentially and 69% year-over-year to $44.1 billion thanks to surging interest in Nvidia’s latest, and pricey, Blackwell AI chips. That was about $810 million better than analysts anticipated.
Unsurprisingly, data center sales, which include most AI revenue, were the brightest shining star. That segment’s revenue rose 73% year-over-year to $39.1 billion.
Gaming and chips for autos, however, also saw substantial growth. Gaming revenue rose 48% from one year ago to $3.8 billion, while autos rose 72% to $567 million.
The results came despite Nvidia taking a $4.5 billion charge associated with writing off excess H20 chips marketed in China because of new export restrictions.
The write-offs caused gross margin to sink to 61%, however, backing out the impact results in gross margin of 71.3%, down from 73% in fiscal Q4. Previously, CEO Jensen Huang’s C-suite had said margins would recover to the mid-70% area by the end of this year.
Nvidia’s adjusted earnings per share were 81 cents, up 33% from last year. Non-GAAP EPS would’ve been 96 cents if not for the write-offs. Analysts were hoping for 75 cents.
“Global demand for NVIDIA’s AI infrastructure is robust. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate,” said Huang.
Nvidia’s fiscal second quarter guidance was a bit shy of estimates, but Wall Street appears to be looking past that toward the potential easing of China restrictions.Â
Nvidia expects sales of $45 billion in Q3, below analysts’ projections for __ billion. However, that guidance includes an $8 billion headwind associated with H20 chips. If trade negotiations clear the way for Blackwell and H20 chip sales in China, guidance may prove to be too conservative.
Wedbush Securities influential technology stock analyst Daniel Ives was impressed by the quarter, saying Nvidia delivered a “very important print and guide for the broader tech world” and remarking “the AI Revolution is heading into its next gear of growth despite the Trump tariff war playing out.”
Nvidia’s stock price is up 4.3% in early action on Thursday, May 29.
Related: Analyst resets Nvidia-backed AI stock price target after 200% surge
