Nvidia's financial report is soaring: AI chip hegemony, computing power anxiety and DeepSeek challenge

Source: Lai Ka Think Tank

In the early morning of February 27, Beijing time, the highly anticipated global "AI leader" NVIDIA announced its fourth quarter results for fiscal year 2025 (November 1, 2024 to January 31, 2025).

The data overall exceeded market expectations, and although the revenue growth rate slowed down, it still hit a new high. Specifically, NVIDIA's Q4 revenue increased by 78% year-on-year to US$39.331 billion, while analysts expected US$38.05 billion; of which data center revenue was US$35.58 billion, a year-on-year increase of 93.32%. Q4 net profit was US$22.066 billion, up 72% year-on-year, corresponding to net profit per share of US$0.89, while analysts expected US$0.84.

Although this is a financial report that exceeded expectations, its growth rate has dropped to double digits for the first time in the past six quarters, and Nvidia's growth curve may slow down. On the day after the financial report was released, Nvidia's stock price fluctuated slightly and finally closed in the red, but on the second trading day, it ushered in the second largest single-day drop since the impact of DeepSeek, and the stock price finally closed down by $11.13, a drop of 8.48%.

01 Why is Nvidia's financial report attracting attention?

Although Nvidia is a company founded in the United States and listed on the U.S. stock market, Nvidia's financial report has touched the hearts of investors around the world. Why is Nvidia's financial report so eye-catching? The main reasons are as follows:

1. Nvidia has performed well in the past few years

For an ordinary consumer, Nvidia's existence may be the first choice of graphics card brand when buying a computer. But in fact, as the world's leading AI company, Nvidia's former core business, games, currently only account for a small part of its revenue, and more revenue comes from the global technology companies' demand for unlimited computing power.

This financial report shows that the data center division is Nvidia's largest source of revenue to date, with sales of $35.6 billion. This exceeded the average expectation of $34.1 billion. Sales related to games - once Nvidia's core business - reached $2.5 billion, and analysts expected an average of $3.02 billion. Automotive business revenue was $570 million.

In the past few years, Nvidia has benefited from a significant increase in demand for GPUs due to the development of global AI technology, and its performance has been impressive, and the data can even be described as "terrible." To give a simple example, in the natural year 2022, Nvidia's revenue was $26.974 billion and its profit was $4.368 billion; in 2023, its revenue and profit reached $60.922 billion and $29.760 billion, respectively. Revenue more than doubled, but profit increased more than 7 times. With the previous value already so "exaggerated", the revenue in 2024 was $130.497 billion and the profit was $72.88 billion, both more than twice the previous value.

If you look at it quarterly, Nvidia's financial report is also very worthy of investors' expectations. For example, the Q4 quarterly financial report released this time had revenue of $39.331 billion, which is even more than the full year of 2022, which highlights how fast the company is growing.

Investors are expecting that Nvidia's financial report will continue the myth of high growth.

2. Nvidia is directly related to the rise and fall of US stocks

Readers familiar with US stocks should know that in the past two years, the market value of US stocks has continued to concentrate on several giants, gradually forming the "Magnificent 7", commonly known as the "Seven Sisters" of US stocks (also known as the Seven Giants of US Stocks), generally referring to Apple (AAPL.US), Microsoft (MSFT.US), Amazon (AMZN.US), Google (GOOGL.US), Meta (META.US), Tesla (TSLA.US), Nvidia (NVDA.US) These seven companies. In December 2024, the total market value of the "Seven Sisters" of US stocks was about 120 trillion yuan, exceeding the total market value of more than 5,000 companies in the A-share market of about 100 trillion yuan.

Behind the prosperity of the US stock market in recent years, it is actually mainly these seven companies that have been continuously raising their stock prices. It is difficult for other stocks to have a relatively long-term positive performance. Therefore, these seven companies are particularly concerned and sought after by investors around the world.

The importance of Nvidia is reflected in two aspects: 1. The huge valuation (which means that its stock price may have a significant impact on the entire market, including the blue-chip Dow Jones Industrial Average); 2. The role in the field of artificial intelligence (this field has played an important role in the overall economic growth of the United States. Some people even analyze that the prosperity of the US stock market this year is mainly due to the AI ​​bubble).

Before DeepSeek came out, Nvidia's stock price closed down 16.97% on January 27. The Nasdaq index was not spared on the same day, and fell 612 points by the close of the market, a drop of more than 3%. Nvidia's market value evaporated by nearly US$590 billion (equivalent to slightly more than 3 AMDs or nearly 18 Cambrian periods), setting a new record in US financial history. ASIC chip concept stock Broadcom closed down 17.4% on Monday, with a market value of nearly $200 billion. Chip foundry TSMC closed down 13.3%, with a market value of more than $150 billion. This performance shows the profound impact of Nvidia as one of the "Seven Sisters" on the US stock market.

It is precisely for the above reasons that Wall Street and global investors participating in the US stock market are more concerned about Nvidia's performance after the emergence of Deepseek. People hope that Nvidia can resist the "computing power doubts" and respond to different voices in the market with high-growth financial reports.

Although some data in Nvidia's financial report continued to set new highs, analysts believe that Nvidia's performance is not bright enough and are more worried about future growth rates. Last night, Nvidia led the decline of the seven sisters in the US stock market. Under the joint action of these seven companies, the Nasdaq index, which is dominated by technology stocks, also once hit the largest drop since the impact of DeepSeek, and finally closed down 2.78%.

3. Will DeepSeek shake Nvidia's position?

As mentioned earlier, DeepSeek once caused Nvidia's stock to "plummet" in the early stage of its emergence. Compared with Nvidia's rise of more than 240% and 171% in 2023 and 2024 respectively, Nvidia's stock price performance this year is "surprising": Nvidia's stock price reached a high of $138.88 at the beginning of 2025, and the latest closing price after the press conference was $120.15, a 13.49% drop from the highest price on the first day of the year, which disappointed many investors.

As to why DeepSeek can affect NVIDIA, some analysts believe that DeepSeek achieves top model performance with limited hardware resources, reducing dependence on high-end GPUs. The low training cost indicates that the demand for computing power investment in large AI models will drop significantly.

The reason why NVIDIA's performance has been soaring in recent years is precisely due to the growing demand for high-end GPUs from large companies to train AI models. If the success of DeepSeek can prove that computing power is not the most important factor, then it is not good news for NVIDIA.

Although NVIDIA's stock price reacted generally on the day of the financial report, it experienced the second largest drop of the year on the second trading day, which made some investors pessimistic about the future trend.

02 The "secret war" of computing power is still going on

Although the financial report released by NVIDIA this time has set new highs in revenue and profit, some people pointed out that the time period corresponding to this Q4 quarterly financial report is from November 1, 2024 to January 31, 2025, when DeepSeek has not yet entered the public eye, so the impact on NVIDIA's performance has not yet appeared.

Opponents said that although DeepSeek is trained in a "beggar version" way, which reduces the market's expectations for NVIDIA's high-end GPUs, even so, the DeepSeek-V3 and DeepSeek-R1 models are still trained on NVIDIA chip clusters represented by H800. In other words, even if DeepSeek is reducing costs and increasing efficiency, it is carried out under the framework of NVIDIA.

Whether you support it or not, at least we can see that Nvidia is also examining the new challenges brought by DeepSeek, an oriental AI product.

In the conference call after the earnings report, Nvidia founder and CEO Huang Renxun said, "The inference model consumes 100 times the computing power, and future inference models will consume more computing power. DeepSeek-R1 has ignited global enthusiasm, which is an excellent innovation. More importantly, it has open-sourced a world-class inference AI model, and almost every AI developer is using R1." He also mentioned in the meeting that Nvidia's Blackwell chip is specially designed for inference, and the current demand for the chip is "exceptionally strong."

Nvidia Chief Financial Officer Colette Kress expects that as Blackwell is brought to market, Nvidia's gross profit margin will return to around 75% by the end of this year. The adjusted gross profit margin for this indicator in the fourth quarter was 73.5%, a year-on-year decrease of 3.2 percentage points, in line with analyst expectations.

However, whether this high-end chip can participate in China's AI construction and help Nvidia continue to create new financial report myths is an unknown. On February 24, Alibaba Group CEO Wu Yongming announced that in the next three years, Alibaba will invest more than 380 billion yuan to build cloud and AI hardware infrastructure, with a total amount exceeding the total of the past ten years. This also set a record for the largest investment in cloud and AI hardware infrastructure construction by Chinese private enterprises.

Although Alibaba alone has invested so much in AI in China, Tencent, ByteDance, Baidu, etc. are also actively launching their own AI construction plans, but in the face of increasingly stringent export controls, although it has had a certain impact on the development of domestic AI in hardware, it has also had a negative impact on the sales of Nvidia's high-end chips.

US giants such as Microsoft and Meta are also vigorously launching their own grand plans with huge investments in the field of AI, but the AI ​​craze on Wall Street is showing signs of cooling down. On the one hand, DeepSeek launched a low-cost AI model, which affected market sentiment; on the other hand, some analysts hinted that Microsoft may cancel the lease of some data centers, which may cause concerns about overcapacity in AI.

Under the influence of the dual unfavorable factors of "export control" and "overcapacity", how long can the legend of Nvidia's financial report last? Only time will tell.

Conclusion

In the AI ​​era of soaring computing power, Nvidia once again confirmed its dominance of the "chip empire" with its financial report myth, but the emergence of DeepSeek is like a double-edged sword, which not only pierces the market's blind belief in computing power, but also ignites the prairie fire of technological innovation. Behind the financial report figures, there is not only a carnival of capital, but also a microcosm of the global technology game - when Eastern algorithms challenge the hegemony of Western hardware with the attitude of "reducing costs and increasing efficiency", a revolution about efficiency and cost is quietly brewing. Can Nvidia's Blackwell chip continue its legend? How will the trillion-dollar gamble of Chinese companies reshape the AI ​​landscape? The answer may be hidden in every future computing power collision, and the only certainty is: this war without gunpowder will eventually define the winner of the next era.