Nvidia's Earnings: A Green Light for Wall Street?

Nvidia's (NVDA) recent earnings report has sparked renewed interest in the tech giant, with investors wondering if it's time to go all in on the stock. The company reported better-than-expected results, with revenue surging 78% year-over-year to $39.3 billion and earnings per share (EPS) up 82% to $0.89. However, the question remains: should Wall Street bet on Nvidia post-earnings?



Nvidia's strong performance can be attributed to several factors:

1. AI Chip Demand: The increasing demand for AI chips, particularly the Blackwell architecture, has driven Nvidia's revenue growth. The company's data center segment, which accounts for much of its revenue, grew 93% year-over-year to a record $35.6 billion (Nvidia, 2025).
2. Cloud Service Providers (CSPs): Large CSPs like AWS, Google Cloud, and Microsoft Azure have been investing heavily in AI infrastructure, driving demand for Nvidia's AI chips. In Q4 FY2025, CSPs accounted for approximately 50% of Nvidia's data center revenue (Nvidia, 2025).
3. Gaming Segment Strength: Nvidia's gaming segment has also contributed to its growth, with revenue increasing 11% year-over-year in Q4 FY2025 (Nvidia, 2025). The continued strength of the GeForce RTX 50-series GPUs and AI-powered gaming innovations have driven consumer demand.



However, there are cautionary factors to consider:

1. Slowing Growth Rates: While Nvidia's revenue and earnings continue to grow, the growth rates have been slowing down. This is expected as the company's sales and profits rise, following the law of large numbers (Nvidia's earnings report, February 27, 2025).
2. DeepSeek's Impact: DeepSeek's announcement of a sophisticated, lower-cost AI model raised doubts about Big Tech's spending on AI infrastructure, leading to a one-day drop of nearly $600 billion in Nvidia's market value. Although Nvidia's CEO acknowledged DeepSeek's innovation, the long-term impact on Nvidia's growth remains uncertain (Nvidia's earnings call, February 27, 2025).
3. Gross Margin Outlook: Nvidia's gross margin outlook for the first quarter of fiscal 2026 is expected to be 70.6% for GAAP and 71.0% for non-GAAP, which is a decrease from the 73.5% non-GAAP gross margin reported in the fourth quarter of fiscal 2025. This decrease may impact Nvidia's profitability in the coming quarters (Nvidia's earnings report, February 27, 2025).

In conclusion, Nvidia's strong earnings report has reignited investor interest in the tech giant. However, Wall Street should remain cautious, considering the slowing growth rates, the potential impact of DeepSeek's lower-cost AI models, and the expected decrease in gross margins. While Nvidia's growth prospects remain promising, investors should approach the stock with a balanced perspective, weighing the potential risks and rewards.