MW Nvidia earnings aren't slowing. Why that's good news for its Big Tech rivals.

By Ryan Shrout

Nvidia's growth means the AI and chip market is expanding, giving others a change to share in the wealth

Nvidia again beat the stock market's raised expectations, reporting impressive financial results for both its fourth-quarter and full 2025 fiscal year. The numbers show a company firmly in command of the AI-driven semiconductor industry, with revenue jumping on the back of continued, unprecedented demand for GPUs.

Nvidia $(NVDA)$ posted total revenue of $39.3 billion for the fourth quarter, representing a 78% increase from the same quarter last year. Data-center revenue reached $35.6 billion, marking a 93% year-over-year increase due to the surging demand for AI compute. Net income for the quarter was $22.1 billion, reflecting an 80% growth over the previous year.

For the full 2025 fiscal year, Nvidia generated total revenue of $130.5 billion, an increase of 114% compared to the prior year. The company also reported net income of $72.9 billion, representing a 145% annual increase. To put Nvidia's meteoric rise into context, its revenue now dwarfs competitors like Intel $(INTC)$, which reported $53 billion in total revenue for 2024, and AMD $(AMD)$, which finished the year at $25.8 billion.

The key to Nvidia's successful quarter? The ramping up of its Blackwell AI chips, which CEO Jensen Huang emphasized as a defining moment for the company.

Looking ahead, Nvidia has projected first-quarter fiscal 2026 revenue of $43 billion, give or take 2%. If realized, that would mark a 21% sequential increase and a 90% year-over-year gain.

Implications for the AI data-center market

The $11 billion in revenue directly attributed to the ramp-up of Blackwell chips not only exceeded market expectations but also dispelled concerns about supply constraints cratering. This suggests that Nvidia's AI business is stronger than some analysts had anticipated, and Blackwell now represents about one-third of the total data-center revenue.

For AMD and Intel, this isn't all bad news. While Nvidia remains dominant, its growth also signals a continuation of the expanding AI market, offering an opportunity for others to carve out a niche. However, both companies will face substantial performance, positioning and software-ecosystem challenges when compared to Nvidia's product lines.

Nvidia's continued dominance also has positive implications for supporting companies in the semiconductor and AI infrastructure ecosystem. Networking giants Broadcom $(AVGO)$ and Marvell Technology $(MRVL)$, memory stalwarts Micron Technology $(MU)$ and SK Hynix (KR:000660), and storage providers Cohesity and Pure Storage $(PSTG)$ all stand to benefit from the AI-driven demand surge.

Market forecasts from Morgan Stanley suggests that Nvidia data-center GPU revenue could double from about $100 billion in 2024 to around $200 billion by 2027, with Nvidia maintaining a 94% revenue share. This leaves some room for competitors, though even a small slice of the pie remains lucrative. For example, if AMD could grow its Instinct revenue to $15 billion by 2027, it would represent a tripling of its current AI GPU sales.

Growing challenges

Cloud giants such as Amazon AWS $(AMZN)$, Microsoft Azure $(MSFT)$, and Alphabet's $(GOOGL)$ $(GOOG)$ Google Cloud are heavily investing in their own custom silicon efforts. Current forecasts suggest this market segment will grow to around $27 billion by 2027 from $11 billion currently, with AWS leading the charge. While still a fraction of the overall AI chip market, the increasing adoption of these custom solutions could put pressure on Nvidia's future sales.

Networking share shifts to Ethernet

Despite Nvidia's strong quarter, one interesting spot was networking revenue, which saw a 3% sequential decline. This drop came despite the broader surge in data-center revenue, raising questions about demand fluctuations and competitive pressures.

One notable shift is the increasing relevance of Spectrum-X, Nvidia's Ethernet-based AI networking solution, which is gaining traction in enterprise deployments. Nvidia has relied on InfiniBand, a high-performance but more expensive networking solution. As we see more adoption of AI hardware in enterprises and in smaller deployments, the industry's cost-conscious nature is driving a shift toward Ethernet.

This transition benefits Broadcom and other Ethernet-focused vendors, and also justifies the recently announced Nvidia and Cisco Systems $(CSCO)$ partnership, enabling the networking company to be the first to offer Nvidia-based networking under its brand. It could also help AMD and other accelerator vendors, which have traditionally been more reliant on Ethernet infrastructure.

Read: Nvidia's earnings were strong. These 6 stocks will benefit.

Consumer GPUs and Gaming

Nvidia's gaming segment experienced a 28% sequential revenue drop, falling to $2.54 billion in the fourth quarter of fiscal 2025 - its lowest since the second quarter of fiscal 2024. The company hinted that this decline is due to a shift in supply allocation, with Nvidia likely prioritizing higher-margin data-center AI accelerators over consumer GPUs.

But it's also worth considering that this revenue drop occurred just before the launch of the Blackwell-based GeForce RTX 50 Series GPUs, available just after the quarter ended. As these new gaming GPUs hit the market, I expect gaming revenue to rebound significantly in the first quarter of fiscal-year 2026.

With AMD's Radeon GPU lineup set to launch in the coming days, Nvidia may need to navigate increasing competition in the consumer market.

Nvidia's future will depend on how well it manages emerging risks.

Nvidia's blowout earnings reaffirm its clear leadership on AI compute, but its future will depend on how well it manages emerging risks.

Can competitors like AMD, Intel and custom silicon providers make meaningful inroads? Will the shift from InfiniBand to Ethernet reshape the AI infrastructure landscape? How will Nvidia balance its AI acceleration focus with the needs of its gaming customers? Still, until a true kink in the company's armor is made, Nvidia will continue owning the market.

Ryan Shrout is the president of Signal65 and founder at Shrout Research. Follow him on X @ryanshrout. Shrout has provided consulting services for AMD, Qualcomm, Intel, Arm Holdings, Micron Technology, Nvidia and others. He holds shares of Intel.

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-Ryan Shrout

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February 27, 2025 16:58 ET (21:58 GMT)

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