Nvidia's AI runway extends again with another revenue record

Nvidia topped quarterly revenue expectations yet again in its fiscal first quarter of 2025, setting quarterly records for both overall revenue and data center revenue for the umpteenth time, and like clockwork, Wall Street observers again asked the same question they ask every quarter: When will the party end?

It didn’t end in Q1 FY2025, as Nvidia posted $26 billion in revenue, a whopping 262% higher than the same quarter last year, 18% up from the previous quarter, and well above the already lofty expectation for $24.9 billion. The company’s Data Center business revenue for the quarter was about $22.6 billion, on its own slightly above what the entire company reported in revenue just one quarter ago. That’s how quickly and how explosively the AI tsunami Nvidia’s riding is moving.

The data center revenue mark represented 23% from the previous quarter and a leap of 427% from a year ago. Meanwhile, other units varied, with Gaming and AI PC revenue down 18% year-over-year to $2.6 billion and Professional Visualization revenue coming in at $427 million, up 45% from a year ago, but down 8% sequentially. Automotive and Robotics revenue reached $329 million, up 17% sequentially and 11% year-over-year.

The company also announced a 10-for-1 stock split just hours after its stock price (briefly) reached $1,000 per share. That means that after June 7, shareholders of record will have more Nvidia shares to love, and investors who missed out on the AI juggernaut earlier will have a more affordable opportunity in front of them.

“Strong and accelerated demand -- accelerating demand for generative AI training and inference on Hopper platform propels our Data Center growth,” said Nvidia co-founder, president and CEO Jensen Huang, according to the Seeking Alpha earnings transcript. “Training continues to scale as models learn to be multimodal, understanding text, speech, images, video and 3D and learn to reason and plan.”

Could the party wind down after the current quarter? If the modest 2% expected revenue growth ($28 billion) Nvidia is projecting for the second quarter of fiscal year 2025 sounds like a downer, then perhaps. Analysts have long been questioning how well Nvidia will continue to do as the AI market shifts from a build-out and training phase toward AI inference.

Lucas Keh, analyst at research firm Third Bridge, said via email, “The biggest question that remains is how long this runway is. Looking at the guidance for next quarter’s growth (28Bn ±2%), although fairly muted from what we’ve seen in the past, points towards an upward trajectory… When the majority of AI workloads in the cloud move over from training to inference, Nvidia’s dominant market share position will be tested. Most use cases in inference do not require the depth/amount of compute provided by Nvidia’s top GPUs, hence the price tag that comes with this makes alternatives like AMD attractive. Third Bridge experts believe that Nvidia will still be able to maintain a foothold in inference and assume almost 40% of their revenue last year was inference-based.”

During the earnings call, Huang commented, “Our inference workloads are growing incredibly. With generative AI, inference, which is now about fast token generation at massive scale, has become incredibly complex. Generative AI is driving a from-foundation-up full stack computing platform shift that will transform every computer interaction.”

There also has been some concern that Nvidia would see at least a brief slow down during the middle part of this year as customers who had been buying Nvidia’s H100 chips could hold out for a few months as they await the arrival of the new Blackwell GPU platform later this year. However, Keh said the modest growth guidance for the current quarter suggests concerns about such an “air bubble for GPU demand” have vanished.

Also, observers like Patrick Moorhead, Founder, CEO, and Chief Analyst at Moor Insights & Strategy, believe there is still enough demand in the data center market to keep Nvidia’s growth from getting too sluggish. While many have noted that hyperscalers represent close to 50% of Nvidia’s business, Moorhead said on CNBC that “increased insatiable demand to work on generative AI models” by data center customers not connected to the hyperscalers, like Lenovo, Dell, and others, will continue for the next year.

There is also reason to believe Nvidia has room to grow in sectors like Automotive, where AI training and inference remain at a somewhat early stages.

Even as questions continue, stock analysts continue to raise their targets for Nvidia shares. For example, Stacy Rasgon, Managing Director and Senior Analyst, U.S. Semiconductors and Semiconductor Capital Equipment at Bernstein Research, raised his price target from $1,000 per share to $1,300. He said, also on CNBC, that Nvidia continues to innovate on hardware and software fronts, and not rest on its laurels, giving competitors “a moving target” to try to catch up with. Early Thursday, the company's share price kept moving upward, hitting $1,039 per share by mid-morning.