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Nvidia (NVDA) has once again delivered a stellar earnings report, proving it can meet and even exceed the market’s lofty expectations. Heading into its fourth-quarter results, the biggest challenge for the chip giant wasn’t just posting strong numbers, but also justifying its stock’s high valuation amid growing concerns over artificial intelligence (AI) spending.
Some investors worried that demand for Nvidia’s high-performance GPUs might slow, especially after the launch of DeepSeek’s R1 model in late January. The Chinese startup built a large language model (LLM) at a significantly lower cost, raising concerns about the future demand for Nvidia’s premium chips.
There were also fears that AI-related spending could cool off, putting pressure on the stock. Over the past couple of months, these concerns weighed on Nvidia’s momentum, making investors question whether the stock could once again deliver above-average gains.
But Nvidia has put those fears to rest. AI demand remains a powerful growth engine, and the company’s latest earnings report showed just that. Data center revenue, a key driver of Nvidia’s growth, continued to climb both sequentially and year-over-year, led by AI-driven demand.
Nvidia’s management remains bullish. The company anticipates strong demand for its next-generation Blackwell chips, easing fears of the demand slowdown following the release of DeepSeek’s R1. Further, as industries race to adopt AI-driven solutions, Nvidia is well-positioned to benefit, making the case for sustained revenue growth.
Given this backdrop, should investors consider adding Nvidia stock as AI demand keeps it hot?
Nvidia’s Record Quarter
Nvidia wrapped up another record-smashing quarter, with Q4 revenue soaring to $39.3 billion, up 12% from the previous quarter and a staggering 78% higher than a year ago. The company outperformed its guidance of $37.5 billion and exceeded Wall Street’s expectations of $38.1 billion. For the full fiscal year 2025, revenue hit $130.5 billion, a 114% jump from the prior year.
A key driver of Nvidia’s explosive growth is its data center segment, which has become the backbone of the company’s business. In fiscal 2025, data center revenue more than doubled, reaching $115.2 billion. The fourth quarter saw data center sales hit a record $35.6 billion, a 16% increase from the previous quarter and a jaw-dropping 93% jump year-over-year.
Demand for Nvidia’s Hopper platform has been through the roof, and the company’s latest Blackwell architecture is ramping up at an unprecedented pace. Blackwell’s sales in Q4 exceeded management’s expectations, contributing $11 billion in revenue. This marks the fastest product rollout in Nvidia’s history and shows that customers are rushing to adopt the company’s cutting-edge AI chips to power the next generation of AI models.
As companies worldwide race to build AI-driven infrastructure, Nvidia remains the go-to provider for the high-performance chips needed to train and run advanced models. In Q4, data center compute revenue shot up 18% from the previous quarter and more than doubled compared to a year ago. This reflects that AI adoption is accelerating across industries, from cloud computing giants to enterprises investing in AI capabilities.
While Nvidia’s revenue and demand are skyrocketing, the company’s adjusted gross margin has taken a hit. In Q4, its adjusted gross margin came in at 73.5%, down both sequentially and year-over-year. The margin pressure is primarily due to the cost of scaling up production for Blackwell, but given the unprecedented demand, Nvidia is betting that this investment will pay off in the long run.
Even with margin pressure, Nvidia’s profitability remains strong. NVDA delivered adjusted earnings of $0.89 per share in Q4, up 10% from the previous quarter and 71% higher than a year ago. Moreover, its EPS once again outpaced Wall Street’s expectations.
Is Nvidia Stock a Buy Right Now?
Nvidia has been riding a wave of strong demand, and that momentum isn’t slowing down anytime soon. The company anticipates a significant ramp-up of its next-generation Blackwell architecture in the first quarter of its fiscal 2026. Management is optimistic, expecting sequential growth across both its Data Center and Gaming segments. Within the data center segment, growth is projected in both compute and networking, reinforcing Nvidia’s dominance in AI-driven infrastructure.
However, while Nvidia’s revenue outlook remains strong, its margins may experience some short-term pressure. As the Blackwell rollout accelerates, the company expects gross margins to dip to the low-70% range. This is largely due to its focus on rapidly manufacturing and deploying Blackwell systems to meet customer demand. Once production scales efficiently, cost improvements should help gross margins climb back to the mid-70% range later in the fiscal year.
Even as Nvidia faces tough comparisons from last year’s extraordinary growth, the company remains well-positioned to capitalize on the AI revolution. The rapid evolution of AI is opening up new market opportunities, from enterprise-focused AI agents to robotics and region-specific AI initiatives. This expansion could fuel Nvidia’s long-term growth.
Given these factors, Wall Street analysts remain bullish on Nvidia, maintaining a consensus “Strong Buy” rating.
