Nvidia (NVDA) Q4 2024 are out today, beating expectations by a wide margin. However, its lower Q1 2025 outlook sent the stock falling 8.4%. Nvidia guided for a gross margin of roughly 71% for the first quarter, lower than its 73% gross margin in the fourth quarter. Despite the earnings beat, experts including Truist Securities analyst William Stein, say that “investors are yawning.”
The chipmaker’s revenue of $39.3 billion and earnings per share of $0.89 topped Wall Street’s estimates, according to Bloomberg consensus data. The company’s data center segment drove this extraordinary performance, generating a whopping $35.6 billion in sales—smashing forecasts of $33.5 billion and representing a 93% increase from the previous year. Nvidia’s Q4 earnings demonstrate the company’s dominant position in the AI chip market, with growth in almost all areas. However, just like most of the tech market, Q1 2025 is a bit of a step back.
Wall Street Reacts To Nvidia Q1 2025 Guidance
Nvidia anticipates its total first quarter revenue will hit $43 billion, plus or minus 2%, above the $42.3 billion expected by Wall Street analysts. However, JPMorgan analyst Harlan Sur noted that the gross margin guidance was “below consensus (72.1%) as the team continues to scale its [Blackwell] shipments higher and incurs expedite fees to get systems to customers as rapidly as possible.”
Furthermore, Bernstein analyst Stacy Rasgon wrote to investors Thursday, “Gross margins at 71% might be a minor nitpick, but we won’t argue that getting product out the door should be the primary consideration at the moment given demand seemingly remains off the charts…” With Nvidia taking a tumble on Thursday, much of the tech market and the Nasdaq Composite also fell back. The tech-heavy index fell as much as 2.8% with big tech companies losing share value.
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Nvidia stock’s drop Thursday puts shares down 12% over the past five trading sessions. Right now, Nvidia stock still has a median price target of $175, which would be a 33% jump from where it stands now. With Q4 again outperforming, the stock has a 67% upside with high-end projects hitting $220. However, this latest setback could prolong that upside.
