What does Nvidia's earnings report really mean for the market?
Nvidia, which is the main character of the US stock market, crushed earnings yesterday, with earnings per share beating expectations by 6%, revenue coming in at $39.3 billion and besting expectations of $38.2 billion, and its data center revenue coming in 4.5% above expectations. It was a solid beat.
Perhaps, however, owing to Nvidia’s habit of utterly smashing expectations, or perhaps just because the AI boom is not news to anyone anymore, initial reaction after the close was at first mixed and then a teensy bit negative after the earnings call in after-hours trading.
The real action comes this morning, after traders sleep on that performance, and will certainly give us some insight into the broader market implications of Nvidia’s Q4. Here are some things we learned about the company in this report that are worth a think:
The company is making a lot of its money from a few big spenders. Its three largest customers are responsible for a combined 34% of its total revenue in fiscal year 2025, and it stands to reason that you can probably guess the names of those companies if you put your thinking cap on.
The flagship of the AI armada sails with a skeleton crew: Nvidia ended the year with just 36,000 employees in 38 counties, which means it added only about 6,000 people last year and still managed to bring in $130 billion.
Nvidia’s gaming business is pretty much the entire reason Nvidia is the behemoth that it is today, serving for decades as the earnings flywheel that provided the R&D funding that delivered the AI giant we have today. Even still, the $11 billion gaming chip business is pretty much on par, in terms of scale, with a Chipotle, or an eBay, or a Kellanova.
So, what should traders really take away from this report?
The earnings release came at a moment of fragility in the market, when a worrisome earnings outlook here or a data center glut red flag there has investors staring into Nvidia’s swirling green eye for guidance and comfort. Traders wanted answers, not questions, coming out of this report. The ambiguous after-hours reaction leaves us wondering: did they get them?