Nvidia is experiencing significant revenue growth driven by the rising demand for AI technology, despite competition from China’s DeepSeek AI model. The company exceeded revenue expectations, with a 78% year-on-year increase, particularly in its data center segment. CEO Jensen Huang noted that DeepSeek has inadvertently boosted interest in Nvidia’s chips. The upcoming launch of the ‘Blackwell’ AI chips is expected to further enhance revenues, although concerns about profit margins and potential restrictions on chip sales to China persist.
Nvidia’s Record Revenue Boosted by AI Market Growth
Nvidia, a leading manufacturer of processors for artificial intelligence (AI), is experiencing unparalleled revenue growth. Despite previous concerns regarding its market dominance due to the emergence of the Chinese AI DeepSeek, Nvidia’s success story continues to flourish.
The surge in demand for AI technology is propelling Nvidia forward, with recent speculations questioning the necessity of its chips for training AI software. These doubts were spurred by DeepSeek, a Chinese AI model that reportedly requires less computational power while achieving similar results compared to its Western counterparts. Following suit, South Korea has recently removed the Chinese AI bot from its app stores, echoing actions taken by other nations.
Nvidia Surpasses Expectations Amidst Growing Infrastructure Needs
Despite the challenges, Nvidia has not only met but exceeded analysts’ revenue predictions for the last quarter. CEO Jensen Huang remarked that DeepSeek has had a surprisingly positive impact on Nvidia’s business, citing that the innovative methods used by Chinese developers for generating AI responses have intensified the demand for Nvidia’s chips. Huang emphasized that modern AI models now demand up to 100 times the processing power of earlier software.
According to Schneider Electric, a competitor in the energy management sector, the rise of DeepSeek will not lessen server demand. CEO Olivier Blum mentioned last week that suppliers are facing challenges in keeping up with the growing market needs. Moreover, the German firm Infineon predicts continued robust growth in power semiconductors dedicated to AI applications, expecting revenues from these products to more than double this year, reaching 600 million euros. Major tech giants in the US, including Meta, Microsoft, Google, and Amazon, are also set to invest significantly in new data centers this year.
Nvidia’s stock has seen dramatic fluctuations, with a notable decline causing a loss of nearly $600 billion in market value. Nonetheless, the company remains a key player in the AI sector, with its chip systems utilized globally for AI training applications. Industry leaders such as Google and Meta rely heavily on Nvidia’s technology, which has resulted in explosive business growth over the past two years.
Currently, Nvidia is rolling out its next-generation AI chips, named ‘Blackwell.’ This launch includes not just individual chips but complete systems that incorporate networking components. The assembly process is intricate, leading to production challenges for Nvidia’s partner TSMC. The technical complexities involved in ‘Advanced Packaging’ are contributing to ongoing supply chain constraints for AI processors.
After experiencing delays in mass production due to development setbacks and high rejection rates, Huang confirmed that these issues have been addressed. He expressed confidence in the extraordinary demand for ‘Blackwell,’ which consists of over a million parts and weighs about one and a half tons. Early revenues from these chips have already reached billions, highlighting the accelerated pace of AI development.
Nvidia’s revenue for the last quarter surged by 78 percent year-on-year, totaling $39.3 billion. Particularly, the data center technology segment saw a remarkable 93 percent growth, amounting to $35.6 billion, with ‘Blackwell’ contributing $11 billion. Overall, profits increased from $12.3 billion to $22.1 billion. Looking ahead, Nvidia estimates a revenue forecast of $43 billion for the current quarter, slightly above analysts’ average expectations.
Maximilian Wienke, a market analyst at eToro, noted that Nvidia stands out as a major beneficiary of the AI revolution, consistently delivering impressive results. However, concerns remain regarding profit margins, as analyst Gil Luria from D.A. Davidson pointed out. Nvidia anticipates profit margins between 70.6 to 71 percent, a slight decline from 73 percent in the previous fiscal quarter, largely due to the high costs associated with ramping up ‘Blackwell’ production. Following these insights, Nvidia’s stock dipped by approximately 1.5 percent in after-hours trading, with investors wary of potential stricter restrictions on the sale of advanced Nvidia chips to China, which could impact business operations.
This information was reported by SWR aktuell on February 27, 2025, at 07:24 AM.