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After heading modestly higher out of the gate today, NVIDIA (NVDA -3%) quickly encountered moderate selling pressure. The AI titan and GPU designer largely delivered what the market has come to expect, exceeding bottom-line estimates handily and posting top-line upside within the $1.0-1.5 bln range, growing total revenue by 77.9% yr/yr to $39.33 bln. However, NVDA failed to return to the $2.0 bln cadence beat registered last quarter and throughout FY24, despite the sizeable step-ups in AI investments from hyperscalers, which plan to allocate more than $300 bln combined toward the technology this year. Still, NVDA projected Q1 (Apr) revenue above consensus, targeting $42.14-43.86 bln, a positive change from its in-line guidance last quarter and a sign that fears over the China-based AI firm DeepSeek wiping out future GPU demand may have been overblown.

• What has not changed is the steadfast demand for all things AI. NVDA's Data Center revenue, which houses most AI-related sales, surged by 93% yr/yr and 16% sequentially, similar to last quarter's stats. Blackwell (NVDA's flagship AI GPU platform) posted $11.0 bln in sales during Q4, well above its initial several billion-dollar estimate issued in Q2 (Jul) and representing over a quarter of consolidated revenue, supported by large cloud service providers.
• Blackwell was architected for reasoning AI models, such as Open AI o3, DeepSeek R1, and Grok 3, which can require 100x more compute per task compared to a one-shot inference where a model must perform just one task. As a result of the incredible uptick in power needed, NVDA mentioned that it would be common for clusters (a group of servers spread over one or many data centers) to start with 100,000 GPUs or more and has already begun shipments for multiple AI infrastructures of this size.
• Geographically, NVDA's sequential Data Center growth was strongest in the U.S. due to its ramp of Blackwell. Still, other countries are pouring billions into AI. In China, the situation is noticeably different. Management noted that sales in the region stayed around half where they were before the onset of export curbs. NVDA expects shipments to remain roughly unchanged going forward.
• Like NVDA's core Data Center segment, Automotive revenue growth was white hot, leaping by 103% yr/yr and 27% sequentially as OEMs continue implementing self-driving and safety systems. Conversely, Gaming revenue fell by 11% yr/yr and 22% sequentially, primarily due to supply constraints. NVDA anticipates robust sequential growth in Q1 as GPU supplies improve. Lastly, Professional Visualization revs inched 10% higher yr/yr and 5% sequentially supported by AI-powered design, simulation and engineering.

NVDA's Q4 report further magnified the exceptional demand for AI. However, the company's tremendous numbers over the past few years have put it in a league of its own, making it crucial to deliver significant outperformance each quarter, especially following Big Tech's considerable AI spending commitments this year. By not delivering a wider sales beat and projecting Q1 revs even higher, investors are booking additional profits today, pushing the stock to potential support at its 200-day moving average (126.60).