Nvidia Corp (NASDAQ:NVDA, ETR:NVD) latest quarterly earnings once again cement its position at the forefront of the artificial intelligence boom, delivering headline-grabbing growth that pushed its shares up 5% in extended trading.
For UK investors, many of whom hold Nvidia indirectly through global technology funds, ETFs and directly through ISAs, this performance matters.
What’s behind the numbers?
Revenue came in at $44.06 billion, well ahead of expectations and 69% higher than a year ago. Net profit rose 26% to $18.8 billion.
Most of that growth came from Nvidia’s data centre business, which includes AI chips, networking hardware and cloud infrastructure. It now contributes nearly 90% of group revenue. Microsoft, a key customer, is scaling up its use of Nvidia’s new Blackwell GPUs into the hundreds of thousands.
Gaming remains solid, up 42% to $3.8 billion, while automotive and robotics saw 72% growth. The only shadow was China.
US export restrictions led to a $4.5 billion write-down on unsold H20 chips and reduced expected sales by $2.5 billion. Gross margin dropped to 61%, although it would have been 71.3% without the China-related charge.
A deeper dive
Nvidia isn’t just growing quickly. It’s doing so in a way that’s highly profitable, which matters a lot to long-term investors.
Growth alone can be exciting, but if it’s fuelled by heavy spending, narrow margins or debt, it’s often unsustainable. Nvidia, by contrast, is showing it can scale while keeping costs well under control.
Take gross profit margin. That’s the percentage of revenue left after subtracting the cost of making and delivering its products, things like chip manufacturing and materials.
Nvidia reported a 75% margin, once you strip out the China-related hit. That’s extremely high. For comparison, Apple, known for its premium margins, typically runs in the high 40s to low 50s.
Most chipmakers fall somewhere below that. A 75% margin suggests Nvidia has serious pricing power and an efficient cost base.
Return on equity, or ROE, is another standout at 119%. This measures how much profit a company generates relative to shareholders’ equity, essentially how effectively it’s using investors’ money.
Anything above 15% is generally considered good. Over 100% is exceptional, bordering on rare. It shows Nvidia is extracting huge returns from the capital it has.
Investors benefit
Then there’s the $14 billion in share buybacks. This is a way of returning cash to shareholders by reducing the number of shares in circulation, which typically boosts the value of each remaining share.
It’s a vote of confidence by management, essentially saying, we think the best investment right now is our own stock.
In other words, Nvidia isn’t just riding the AI wave. It’s riding it with an engine built for speed and endurance. It’s making money hand over fist, reinvesting it wisely, and rewarding shareholders along the way.
That combination, rapid top-line growth alongside strong underlying fundamentals, is part of what makes the company so compelling in today’s market.
What Wall Street is saying
Despite the China overhang, sentiment among analysts has turned more bullish. TD Cowen raised its price target from $140 to $175, calling Nvidia its “Top Compute Pick” and highlighting the company’s excellent financial health and strong operational efficiency.
The firm believes earlier worries about rack-scale performance are fading thanks to successful NVLink deployments with large cloud providers.
Bears may now shift their attention to the upcoming transition to Nvidia’s GB300 series, which could present new challenges. Even so, Cowen expects further upgrades to earnings forecasts as demand remains strong.
Jefferies, Evercore ISI and Cantor Fitzgerald have also weighed in. Cantor maintained its $200 target, Mizuho raised its forecast to $170, and Evercore praised the momentum in Nvidia’s data centre division.
Jefferies expects Nvidia to beat estimates in the second half of 2025, helped by clearing inventory and accelerating Blackwell shipments. DA Davidson took a more cautious stance, citing lingering uncertainty around China.
What’s next?
The near-term outlook is positive, but risks remain. The China export ban has effectively closed off a $50 billion market, according to chief executive Jensen Huang. The upcoming shift to new GB300 chips will need careful execution.
Still, Nvidia’s position at the core of AI infrastructure makes it well placed to benefit from continued investment in generative AI, data centres and high-performance computing.
With strong forecasts, increasing analyst confidence and a dominant market position, Nvidia remains a pivotal name in global equity portfolios and one that UK investors will continue to watch closely.