The number Wall Street analysts zeroed in on during Nvidia’s earnings call

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The number Wall Street analysts zeroed in on during Nvidia’s earnings call

Nvidia’s gross margin guidance was a sticking point for some analysts during its earnings call on Wednesday.Artur Widak/NurPhoto

Nvidia’s gross margin guidance came up several times during its fourth-quarter earnings call.

Nvidia expects gross margins in the “low 70s” in the current quarter as it focuses on speeding up Blackwell chip production.

After that, Nvidia CFO Colette Kress said gross margins are expected to improve to the “mid 70s.”

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with its fourth-quarter earnings report — but its gross margin guidance was a sticking point for Wall Street during the analyst call on Wednesday.

The metric, a closely watched measure of profitability, was asked about multiple times by analysts after Nvidia projected GAAP and non-GAAP gross margins in the current quarter to be 70.6% and 71.0%, give or take 50 basis points.

Nvidia CFO Colette Kress said expectations that it would be in the “low 70s” was partly because of the increased costs from speeding up the manufacturing of Blackwell systems and chips to meet demand.

Once Blackwell is fully ramped, Kress said there will be an opportunity to improve costs and Nvidia anticipated its gross margin would “return to the mid-70s, late this fiscal year.”

One analyst asked whether it was correct to view the first quarter guidance as the bottom for gross margins, to which the CFO reiterated the company’s explanation

In the final question of the Q&A segment, a Citi analyst asked Kress to explain the company’s confidence in gross margin growth, given the uncertainty around the impact of tariffs on the semiconductor industry.

Kress said Nvidia’s gross margins are “quite complex in terms of the material” and everything that goes into the Blackwell system. She said there’s a “tremendous amount of opportunity” to explore factors that could contribute to improving gross margins.

Once Blackwell has ramped up, Kress said the company can “begin a lot of that work.”

“If not, we’re going to probably start as soon as possible,” Kress said, adding that if it can be improved in the short term, the company will also do that.

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GPU architecture for its AI chips, and Kress said Nvidia expects “a significant ramp of Blackwell in Q1.” The company announced Wednesday that its Blackwell chips reached full-scale production, generating $11 billion in revenue in its fourth quarter.

“This is the fastest product ramp in our company’s history, unprecedented in its speed and scale,” Kress said during the call.

Nvidia CEO Jensen Huang said during the analyst call that the company experienced an initial “hiccup” in early production and it was a “challenging transition” to go from the previous generation chipset, Hopper, to Blackwell.

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Kress said that while tariffs remain a “bit of an unknown” until further guidance from the government is given, the company plans to follow “export controls and or tariffs in that manner.”

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leading up to Nvidia’s earnings release, as President Donald Trump’s administration considers tightening chip export rules to restrict China’s AI progress. Nvidia is not allowed to sell its most advanced AI chips to China and instead sells a less-powerful version to ******** customers.

Last month, Trump also threatened

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, where Nvidia’s chip manufacturing partner TSMC is based.

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experienced volatile after-hours trading immediately following the earnings release, dropping as much as 2% before stabilizing following comments from Nvidia’s CFO that demand for Blackwell “exceeded” expectations. The company’s stock was down over 4% mid-day Thursday.

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#number #Wall #Street #analysts #zeroed #Nvidias #earnings #call

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