Nvidia posts first earnings report following DeepSeek launch; how did it do?

It was a highly anticipated earnings report, having become the de facto barometer of the potential for AI-related industries, and given the disruption of the recent DeepSeek launch that was a significant curveball.

But, when it announced its fourth quarter results after the bell Wednesday, did Nvidia rise to the occasion?

With record quarterly revenue of $39.3 billion, up 12% quarter-over-quarter and 78% year-over-year, the headline certainly appears positive. Earnings per share beat expectations with $0.89 adjusted vs. $0.84 estimated.  

Add in record data center revenue of $35.6 billion (up 16% and 93% when compared to the previous quarter and year respectively), and top it off with record annual revenue up 144% to $130.5 billion and surely that’s job done?

That rather depends on what the job is. If it’s delivering for those that hold its stock, there is clearly plenty of good news that builds on the firm’s strong run of success.

Such as sales of its next-generation chip Blackwell, which delivered around $11 billion in revenue in the quarter, with demand growing.

“We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter.  AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries,” said Jensen Huang, the firm’s founder and CEO.

But if the job that is needed is to spark a rebound of the tech-fueled stock rally seen in 2024, it may be too much to ask.

Nvidia stock closed 3.7% higher than it was at the opening bell, but the S&P 500, Nasdaq, and Dow Jones Industrial Average did not end with significant swings.

Recent data shows that stock pickers are holding their smallest share of megacap names since the global financial crisis, and have found that the strategy is helping their performance. And that means that, while Nvidia’s earnings report was good, it is unlikely to reignite the Magnificent Seven.

In an interview with Bloomberg Television, Bank of America strategist Savita Subramanian said she expects continued broadening of US stock performance beyond big tech.

“There are a lot of attractive opportunities within the S&P 500 that may not be the Magnificent Seven,” she said.  “The theme is not necessarily ‘rest of world over US,’ but broadening trends outside of just mega cap tech.”