In the immortal words of Jerry Reid, when you're hot, you're hot, and when you're not, you're not.
Sorry to ear-worm you with that 1971 monstrosity, but the lyrics could apply to the AI-chip making colossus Nvidia (NVDA) , which until recently had been hotter than a two-dollar toaster in mid-August.
Which is not say that Chief Executive Jensen Huang and his crew will lining up at a soup kitchen any time soon. But there seems to be a chill in the company's rarefied air.
Nvidia beat Wall Street’s fiscal-fourth-quarter expectations and issued strong guidance.
However, the gross-margin forecast, which indicates a company's efficiency in managing its core production costs and generating profit, was disappointing.
Nvidia CEO Jensen Huang said Blackwell was going to be incredible across the board. (Photo by Patrick T. Fallon/AFP via Getty ImagesPATRICK T. FALLON/Getty Images
Nvidia CEO: we will grow strongly in 2025
In addition, the tech sector is contending with the Chinese AI startup DeepSeek’s claims that it had developed AI models rivaling Western counterparts at a fraction of their cost.
"DeepSeek R1 has ignited global enthusiasm," Huang told analysts during the company's earnings call. "It's an excellent innovation, but even more importantly, it has open-sourced a world-class reasoning AI model."
Huang said that Blackwell, Nvidia’s graphics processing unit architecture, "is going to be incredible across the board."
"We're at the beginning of reasoning AI and inference time scaling," he said. "But we're just at the start of the age of AI, multimodal AIs, enterprise AI, sovereign AI and physical AI are right around the corner."
"We will grow strongly in 2025," Huang added. "Going forward, data centers will dedicate most of [capital spending] to accelerated computing and AI."
The Donald Trump administration's threat to impose tariffs is also circling overhead. Chief Financial Officer Colette Kress said that "it's a little bit of an unknown ... until we understand further what the U.S. government's plan is, both its timing, its where, and how much.
"So, at this time, we are awaiting, but again, we would, of course, always follow export controls and/or tariffs in that manner," she said.
Trump has threatened a 25% tariff on the European Union and said that Mexico and Canada would face a 25% levy on March 4. China could get another 10% tax on that day.
Nvidia reported revenue of $39.3 billion, a 78% surge from a year earlier, and operating income of around $25.52 billion.
Revenue from its key data center segment, which houses the chips and processors that power AI systems, nearly doubled from a year earlier to $35.6 billion.
The Santa Clara, Calif., group's shares closed on Thursday off 7% at $122.17.
As James “Rev Shark” DePorre sees it, Nvidia's earnings report wasn’t a blowout, "but it beat on both the bottom and top lines and the chipmaker raised guidance."
While there was some concern about margins, the veteran trader said in his recent TheStreet Pro column that the DeepSeek threat was addressed and the second half of 2025 was forecast to be strong.
Trader says AI 'boom phase is over'
"The bottom line is that AI is no longer the market leader it once was." DePorre said.
"The sector is maturing, and there are new developments driving specific stocks, but the boom phase is over, and now the story is more about the development of specific applications," he added.
Nvidia's report is boosting data centers and some other AI plays, but valuation continues to be an issue and momentum in the sector appears to have stalled, he said.
"The Magnificent Seven is up about 1%, although it is a tepid bounce and there is already some fading," DePorre said, referring to the collection of such tech titans as Nvidia, Tesla (TSLA) , Amazon (AMZN) and Microsoft (MSFT) .
He noted that much of the market's struggles the past few weeks have been about a shift in market leadership.
"There has been very difficult rotational action, but the primary theme has been that the Mag 7 are no longer the leaders, and the market isn’t very certain about what areas will start to outperform," DePorre said.
Trump’s tariff comments, he added, have been causing sharp uncertainty and increasing worries about consumer sentiment and economic growth.
"There is a very high level of uncertainty, and that, combined with the shifting leadership, is creating market difficulties," he said.
B of A lifts Nvidia price target
Bank of America Securities analysts boosted their price target on Nvidia's shares to $200 from $190 and reiterated their buy rating following the earnings report.
Nvidia, the firm said, "remains in a dominant position of leading the AI market towards compute-intensive inference, agentic applications, and physical AI/robotics."
“Despite multiple headwinds (DeepSeek, Blackwell transition, China restrictions), NVDA reported 78% year-over-year growth in fiscal-Q4 sales, while guiding fiscal Q1 to $43 billion, about $1 billion ahead and up 66% year over year," B of A told investors in a research note.
The fourth quarter included nearly $11 billion of Blackwell sales, the investment firm said, well above expectations of $4 billion to $7 billion and providing reassurance that the product is on track.
"We understand the desire to diversify portfolios away from AI/cloud, but we believe this underappreciates the solid (and global) pace of AI investments and NVDA's compelling valuation," BofA said.
"We expect NVDA to reenergize as excitement builds for its flagship [GPU Technology Conference] trade show in mid-March," the firm added.
