NVIDIA Stock Gains as Q4 Earnings and Revenues Beat Estimates

NVIDIA Corporation's NVDA shares were trading 1% higher during pre-market trade today as the company reported better-than-expected results for the fourth quarter of fiscal 2025. The chip maker reported non-GAAP earnings of 89 cents per share, which beat the Zacks Consensus Estimate by 5.95%. The reported figure soared 71% year over year while increasing 10% sequentially, mainly driven by higher revenues, partially offset by higher costs.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.NVDA’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.9%.Fiscal fourth-quarter revenues climbed 78% year over year and increased 12% sequentially to $39.33 billion. The robust growth in the top line was mainly driven by record sales in the Data Center end market and higher sales across the Professional Visualization and Automotive end markets. The top line also beat the consensus mark of $37.72 billion.NVIDIA Corporation Price, Consensus and EPS Surprise NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation QuoteNVIDIA's Segmental DetailsNVIDIA reports revenues under two segments — Graphics and Compute & Networking.The Graphics segment includes GeForce GPUs for gaming and personal computers, the GeForce NOW game-streaming service and related infrastructure. The segment also offers solutions for gaming platforms, Quadro GPUs for enterprise design, GRID software for cloud-based visual and virtual computing, as well as automotive platforms for infotainment systems.Graphics accounted for 8% of fiscal fourth-quarter revenues. The segment’s top line plunged 22% year over year while decreasing 19% sequentially to $3.3 billion. Our fiscal fourth-quarter revenue estimate for the Graphics segment was pegged at $4.82 billion.Compute & Networking represented 92% of fiscal fourth-quarter revenues. The segment comprises the Data Center platforms and systems for artificial intelligence, high-performance computing and accelerated computing, the DRIVE development platform for autonomous vehicles and Jetson for robotics, as well as other embedded platforms.Compute & Networking revenues soared 101% year over year and 16% sequentially to $36.04 billion. Our fiscal fourth-quarter revenue estimate for this segment was pegged at $32.68 billion.NVIDIA Market Platform Top-Line DetailsBased on the market platform, revenues from Data Center (90.5% of revenues) jumped 93% year over year and 16% from the previous quarter to $35.58 billion. This robust rise was mainly driven by higher shipments of the Hopper 200 and Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications. Our estimate for this end market’s fiscal fourth-quarter revenues was pegged at $33.17 billion.NVIDIA witnessed strong demand for its chips used in the Data Center by customers in compute markets. During the fiscal fourth quarter, large cloud providers represented approximately 50% of Data Center revenues, while the remaining stemmed from consumer internet and enterprise companies.Gaming revenues decreased 11% year over year and 22% sequentially at $2.54 billion, accounting for 6.5% of the total revenues. The year-over-year decline reflects lower shipments due to limited supply for both Blackwell and Ada GPUs. Our estimate for the Gaming end market’s fourth-quarter revenues was pegged at $3.22 billion.Professional Visualization revenues (1.3% of revenues) increased 10% year over year and 5% sequentially to $511 million. The increase was primarily driven by the continued ramp up of Ada RTX GPU workstations for use cases such as generative AI-powered design, simulation and engineering. Our estimate for the Professional Visualization end market’s fiscal fourth-quarter revenues was pegged at $521.1 million.Automotive sales (1.4% of revenues) in the reported quarter totaled $570 million, up 103% on a year-over-year basis and 27% sequentially. The increase was mainly driven by the continued ramp up in autonomous vehicles, including cars and robotaxis. OEM and Other revenues (0.3% of revenues) were up 40% year over year and 30% sequentially to $126 million. Our estimate for the Automotive and OEM end markets’ fiscal fourth-quarter revenues was pegged at $488.6 million and $106.8 million, respectively.NVDA Operating DetailsNVIDIA’s non-GAAP gross margin of 73.5% reflects a contraction of 320 basis points (bps) on a year-over-year basis and 150 bps sequentially. The sequential decline in non-GAAP gross margin was primarily due to a transition to more complex and higher-cost systems within the Data Center.Non-GAAP operating expenses increased 53% year over year and 11% sequentially to $3.38 billion. The increase was primarily driven by higher compensation and benefits expenses due to employee growth and compensation increases. Also, engineering development, computing and infrastructure costs for new product introductions lead to higher costs. However, as a percentage of total revenues, non-GAAP operating expenses declined to 8.6% from 10% in the year-ago quarter and 8.7% in the previous quarter.The non-GAAP operating income jumped 73% year over year and 10% sequentially to $25.52 billion, driven by higher revenues. Non-GAAP operating margin declined to 64.9% from the year-ago quarter’s 66.7% and the previous quarter’s 66.3% due to lower gross margin, partially offset by lower operating expenses as a percentage of revenues.NVIDIA’s non-GAAP net income margin of 56.1% for the fourth quarter contracted 190 bps year over year and 90 bps sequentially.NVIDIA’s Balance Sheet and Cash FlowAs of Jan. 26, 2025, NVDA’s cash, cash equivalents and marketable securities were $43.2 billion, up from $38.4 billion as of Oct. 27, 2024. The increases primarily reflect higher revenues partially offset by stock repurchases. As of Jan. 26, the total long-term debt was $8.46 billion, which remained unchanged sequentially.NVIDIA generated $16.6 billion in operating cash flow, up from the year-ago quarter’s $11.5 billion but down from the previous quarter’s $17.6 billion. In fiscal 2025, it generated an operating cash flow of $64.1 billion. NVIDIA generated a free cash flow of $15.52 billion in the fourth quarter and $60.72 billion in the fiscal 2025.In the fiscal fourth quarter, the company returned $245 million to its shareholders through dividend payouts and repurchased stocks worth $8.1 billion. In fiscal 2025, the company paid out $834 million in dividends and bought back stocks worth $33.7 billion.On Aug. 26, 2024, NVIDIA’s board of directors approved a new $50 billion share repurchase authorization, bringing the total authorization to $57.5 billion, which has no expiration. As of Jan. 26, 2024, the company has the remaining authorization of approximately $38.4 billion.NVIDIA Initiates Q1 2026 GuidanceFor the first quarter of fiscal 2026, NVIDIA anticipates revenues of $43 billion (+/-2%), higher than the Zacks Consensus Estimate of $41.06 billion.The non-GAAP gross margin is projected at 71% (+/-50 bps). Non-GAAP operating expenses are estimated at $3.6 billion.NVDA’s Zacks Rank & Other Stocks to ConsiderNVIDIA currently carries a Zacks Rank #2 (Buy).Atlassian TEAM, Zscaler ZS and Fortinet FTNT are some other stocks that investors can consider in the broader Zacks Computer and Technology sector. TEAM, ZS and FTNT carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Atlassian shares have soared 40.3% in the past year. The Zacks Consensus Estimate for TEAM’s fiscal 2025 earnings is pegged at $3.44 per share, indicating a 17.4% year-over-year increase.Zscaler shares have plunged 19.2% in the past year. The Zacks Consensus Estimate for ZS’ fiscal 2025 bottom line is pinned at earnings of $2.99 per share, indicating a year-over-year decline of 6.3%.Fortinet shares have gained 56.1% in the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.43 per share, suggesting a year-over-year increase of 2.5%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA): Free Stock Analysis Report Fortinet, Inc. (FTNT): Free Stock Analysis Report Atlassian Corporation PLC (TEAM): Free Stock Analysis Report Zscaler, Inc. 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