Nvidia, the prominent chip manufacturer, reported a remarkable revenue growth of $39.3 billion in the fourth quarter, surpassing the anticipated $38 billion from the previous quarter. This marks a 45% increase compared to the same period last year. Central to this impressive performance is the new Blackwell chip, which alone contributed $11 billion to the quarterly revenue. Despite these achievements, Nvidia's burgeoning cash reserves raise concerns about potential slowing demand for chips.
The successful launch of the Blackwell chip has generated "amazing" demand, with billions of dollars in sales already taking shape in the first quarter. This surge has bolstered Nvidia's cash pile, which now stands at an impressive $43.2 billion, a significant increase from $26 billion a year ago. However, this substantial cash reserve also serves as a cautionary sign that demand for chips could be tapering off.
Inventory levels have swelled to $10.1 billion last quarter, up from $7.7 billion recorded at the end of September 2024. Despite this increase, Nvidia remains optimistic about its financial future, projecting revenues for the upcoming quarter at $43 billion, with a margin of error of plus or minus 2%. The company's forecast for future revenues indicates a positive trend.
Nvidia maintains robust profit margins, boasting a gross profit margin of 73%, which stands favorably against industry peers. However, the introduction of complex products like the Blackwell chip has resulted in slight deceleration in profit margins. This is a reflection of the intricate nature and associated costs of developing such advanced technology.
The company's revenue from China experienced a decline due to trade restrictions imposed by the Biden administration. These restrictions were subsequently extended by Trump, leading Nvidia to anticipate that Chinese revenue will remain stagnant this quarter. This situation underscores Nvidia's customer concentration risk, as it continues to rely on a few large customers.
Despite these challenges, Nvidia's financial strength further solidified last quarter, with net income rising to $22.09 billion, up from $19.36 billion in the third quarter. This growth indicates strong operational efficiency and strategic management amidst a challenging global economic landscape.