Nvidia Corporation’s Earnings Report: Slowing Growth and Gross Margin Concerns
Nvidia Corporation, a leading technology company specializing in graphics processing units (GPUs) and system-on-a-chip units (SoCs), recently reported its financial results for the fourth quarter (4Q) of the fiscal year 2025 (FY2025). The company surpassed both revenue and earnings per share (EPS) consensus estimates, but the earnings surprises have been narrowing.
Financial Performance
Nvidia reported revenue of $7.1 billion for 4Q FY2025, a 13% year-over-year (YoY) increase. This figure was higher than the consensus estimate of $6.95 billion. EPS came in at $1.64, surpassing the consensus estimate of $1.55. However, the earnings surprise was smaller compared to previous quarters.
Growth Momentum Slows Down
Despite the strong financial performance in 4Q FY2025, Nvidia’s growth momentum has been slowing down. The company’s revenue growth rate has been declining YoY for several quarters. In the first quarter (1Q) of FY2026, Nvidia reported a revenue growth rate of 3%, which was lower than the 11% growth rate in 4Q FY2025.
Gross Margin Pressure
One of the main reasons for the slowing growth and declining gross margins is the production of Nvidia’s Blackwell chips. These chips, which are used in the company’s data center business, have lower gross margins compared to Nvidia’s traditional GPUs. In 1Q FY2026, Nvidia’s gross margin dropped to the low 70s.
Tariffs and Uncertainty
Management indicated that uncertainty surrounding tariff policies could impact Nvidia’s gross margin recovery to the mid-70s in the second half (2H) of FY2026. The ongoing trade tensions between the US and China could result in increased production costs for Nvidia, which could put pressure on the company’s gross margins.
Impact on Consumers
The slowing growth and gross margin pressure at Nvidia could have implications for consumers. Nvidia’s GPUs and SoCs are used in various applications, from gaming to artificial intelligence (AI) and data center solutions. As production costs increase and gross margins decline, Nvidia may need to pass on these costs to consumers in the form of higher prices for its products.
Impact on the World
The technology sector, particularly the semiconductor industry, could be affected by Nvidia’s financial performance and the ongoing trade tensions between the US and China. Many companies rely on Nvidia’s GPUs and SoCs for their products and services, and any disruption to Nvidia’s supply chain could impact these companies as well. Additionally, the trade tensions between the US and China could lead to increased production costs for many technology companies, which could result in higher prices for consumers.
Conclusion
Nvidia Corporation’s financial performance in 4Q FY2025 was strong, but the company’s growth momentum has been slowing down, and gross margins have been under pressure due to the production of Blackwell chips and uncertainty surrounding tariff policies. These factors could have implications for consumers, who may see higher prices for Nvidia’s products, as well as for the technology sector as a whole, which could face increased production costs and potential supply chain disruptions.
- Nvidia Corporation reported strong financial performance in 4Q FY2025, but growth momentum has been slowing down.
- Gross margins dropped to the low 70s in 1Q FY2026 due to Blackwell chip production and uncertainty surrounding tariff policies.
- Consumers could see higher prices for Nvidia’s products, and the technology sector could face increased production costs and potential supply chain disruptions.
