NVIDIA Corp stock forecast: expectations of a decline in gross margin weigh on the company’s stock

On February 26, NVIDIA Corp (NASDAQ: NVDA) announced a record Q4 fiscal 2025 revenue of $39.30 billion, up 78.0% from the previous year, driven by strong demand for AI and data centre chips. However, management warned of a potential decline in gross margin to 71.0% next quarter due to high production costs for the next-generation Blackwell chips. It also highlighted possible risks associated with export restrictions and reduced capital expenditures by major clients. Despite the strong financial performance, NVIDIA’s stock fell by 8.5% as investors were concerned that the company’s growth could slow.

This article examines NVIDIA Corp, outlines its revenue streams, reviews NVIDIA Q4 2025 performance, and discusses expectations for the next quarter. In addition, it provides the NVIDIA stock forecast for 2025.

About NVIDIA Corp

NVIDIA Corp is a US tech company established in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem. Jensen Huang has remained the company’s CEO since its foundation. NVIDIA specialises in producing GPUs, chips for AI, data centres, and autopilot systems. The company plays a key role in developing gaming, professional visualisation, and AI computing. NVIDIA also held a prominent place in the cryptocurrency mining industry as its graphics cards were widely used for mining Bitcoin, Ethereum, and other digital assets. The company went public on 22 January 1999 on the NASDAQ under the NVDA ticker symbol.

NVIDIA Corp’s main revenue streams

NVIDIA is primarily known for its GPUs, but it has recently expanded into the AI segment, dominating the market with high-performance chips used for AI technology development. The company reports revenues from this segment under the Data Center section. NVIDIA’s business model focuses on several key areas:

• GPUs: this includes the gaming segment and professional visualisation. The company supplies the gaming industry with GPUs for gaming PCs, consoles, and other devices, ensuring high game performance. Professional visualisation includes GPU sales for professionals involved in 3D graphics, CAD, animation, video editing, and other tasks that require high computing power
• Data Center: this is one of NVIDIA’s fastest-growing segments. The company develops GPUs and other hardware solutions for data centres, which are used in AI infrastructure, deep learning technologies, cloud computing, and big data processing
• Automotive segment: NVIDIA is actively developing products for the automotive sector, including self-driving platforms and advanced driver-assistance systems (ADAS)
• OEM and Others: this category includes earnings from technology licensing, sales of other chips and solutions for OEM manufacturers, such as laptop and other electronic device producers

NVIDIA diversifies its operations, covering various segments from gaming to data centres and automotive components. The company publishes statistics on the gaming, data centre, professional visualisation, and automotive segments in its quarterly reports, while other indicators are included in the Other Revenues section.

NVIDIA Corp Q2 FY 2025 report

On 28 August 2024, NVIDIA released its earnings report for Q2 fiscal year 2025, which ended on 28 July 2024. Below are the key figures compared to the corresponding period of last year:

• Revenue: 30.04 billion USD (+122%)
• Net income: 16.95 billion USD (+152%)
• Earnings per share: 0.68 USD (+152%)
• Operating profit: 19.94 billion USD (+156%)
• Gross margin: 75.1% (+500 basis points)

Revenue by segment:

• Data Center: 26.27 billion USD (+154%)
• Gaming: 2.88 billion USD (+16%)
• Professional Visualization: 454 million USD (+20%)
• Automotive: 346 million USD (+37%)

In the first half of 2024, NVIDIA returned 15.40 billion USD to shareholders through share repurchases and dividends. As of the end of Q2 2024, the company had 7.50 billion USD remaining for stock buybacks. On 26 August 2024, the Board of Directors approved an additional 50.00 billion USD for share repurchases, with no expiration date.

Although the Q2 fiscal 2025 results surpassed analyst forecasts, NVIDIA shares fell immediately after the release. Investors were not particularly impressed by the revenue and profit growth, as financial indicators had surged from 200% to 700% in the previous quarter. Maintaining such rapid growth over the long term is clearly unrealistic, but investor expectations remain elevated.

A fundamental analysis of NVIDIA’s report showed that revenue increased across all segments. The data centre segment, which focuses on AI technologies, remained the leader. The company’s operating margin chart below illustrates the extent to which AI has influenced NVIDIA’s performance.

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OpenAI announced ChatGPT on 30 November 2022, and by Q1 2023, NVIDIA reported an increase in its operating margin. It then grew at a rapid pace, even surpassing the levels seen during the cryptocurrency mining boom. In fact, this suggests that the company has been raising product prices without a decline in demand, allowing it to generate more than 50 cents in profit for every dollar invested.

NVIDIA Corp Q3 FY 2025 report

On 20 November 2024, NVIDIA released its earnings report for Q3 fiscal 2025, which ended on 27 October 2024. Below are the key figures compared to the corresponding period of last year:

• Revenue: 35.08 billion USD (+94%)
• Net income: 19.31 billion USD (+109%)
• Earnings per share: 0.78 USD (+111%)
• Operating profit: 21.86 billion USD (+110%)
• Gross margin: 74.6% (+60 basis points)

Revenue by segment:

• Data Center: 30.77 billion USD (+112%)
• Gaming: 3.27 billion USD (+15%)
• Professional visualization: 486 million USD (+17%)
• Automotive: 449 million USD (+72%)

In the commentary on the report, Jensen Huang stated, “The age of artificial intelligence is in full steam, driving a global shift to NVIDIA computing,” and emphasised the strong demand for the Hopper and Blackwell microarchitecture products, which drove record results in the last quarter.

For Q4 fiscal 2025, NVIDIA forecast revenue of 37.50 billion USD (with a possible deviation of 2%) and a non-GAAP gross margin of 73.5%, reflecting confidence in further growth despite supply restraints, particularly due to the Blackwell production ramp-up.

NVIDIA Corp Q4 FY 2025 report

On 26 February 2024, NVIDIA published its earnings report for Q4 fiscal 2025, which ended on 26 January 2025. Below are the key figures compared to the corresponding period of last year:

• Revenue: 39.33 billion USD (+78%)
• Net income: 22.09 billion USD (+80%)
• Earnings per share: 0.89 USD (+82%)
• Operating profit: 24.03 billion USD (+77%)
• Gross margin: 73.0% (+300 basis points)

Revenue by segment:

• Data Center: 35.58 billion USD (+93%)
• Gaming: 2.54 billion USD (-11%)
• Professional Visualization: 511 million USD (+10%)
• Automotive: 570 million USD (+103%)

Jensen Huang commented on the Q4 fiscal 2025 earnings report, saying that “artificial intelligence has been developing at an incredible pace, as agentic AI and physical AI are creating the basis for the next AI wave, which will revolutionise the largest industries”, underscoring the company’s key role in the AI boom, which led to record revenues of 39.30 billion USD. He highlighted the strong results of the Data Center segment, which reached 35.60 billion USD thanks to demand for the Hopper and Blackwell microarchitecture solutions.

For Q1 fiscal 2026, NVIDIA expects revenue of 43.00 billion USD (with a possible deviation of 2%) and a non-GAAP gross margin of 71.0%, indicating sustainable growth in the company’s revenue. However, the decline in gross margin raises concerns among investors.

Expert forecasts for NVIDIA Corp

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• Barchart: 38 out of 44 analysts rated NVIDIA stock as a Strong Buy, two as a Buy, and four as a Hold. The highest price target is 220 USD
• MarketBeat: 40 out of 43 specialists assigned a Buy rating to the shares, while three gave a Hold recommendation. The highest price target is 220 USD
• TipRanks: 38 out of 41 respondents gave the stock a Buy rating, and three recommended it as a Hold. The highest price target is 220 USD
• Stock Analysis: 22 out of 42 experts rated the shares as a Strong Buy, 18 as a Buy, and two as a Hold. The highest price target is 220 USD

None of the surveyed analysts recommend selling NVIDIA shares.

NVIDIA Corp stock price forecast for 2025

Following the release of the quarterly earnings report, NVIDIA stock dropped to 120 USD. The nearest support level on the weekly chart is 100 USD. Based on NVIDIA stock performance, potential price movements in 2025 are as follows:

The primary forecast for NVIDIA’s stock suggests it could test the 100 USD support level, rebound, and rise to the nearest resistance level at 130 USD. A breakout above this level could drive the price to an all-time high of 153 USD.

The alternative forecast for NVIDIA’s shares predicts a break below the 100 USD support level, potentially causing the share price to fall to 76 USD.

Risks of investing in NVIDIA Corp stock

Based on NVIDIA’s management forecast for 2026, investing in the company’s stock involves several risks, outlined below:

• Gross profit and operating costs: in the Q1 FY 2026 forecast, the company expects a gross profit margin of 71.0%, lower than the previous figures of 73.0 and 76.0% a year earlier. This decline is due to the accelerated production of the new Blackwell chip, which may result in higher operating costs and lower profitability
• Geopolitical risks and trade restrictions: NVIDIA’s CFO, Colette Kress, expressed concerns about potential tariffs and export restrictions from US President Donald Trump’s administration, particularly concerning China. These uncertainties may negatively impact the company’s financial results and its ability to supply products to key markets
• Competition and technology risks: the unexpected emergence of the Chinese AI startup DeepSeek with its R1 model could reduce AI spending and increase competition for NVIDIA. This may lead to reduced demand for the company’s products and affect its market share
• Increased volatility and investor reaction: following the report release, NVIDIA’s stock dropped by 8.5%, indicating that the market is sensitive to the company’s financial performance and investor expectations. Such fluctuations may continue, impacting the cost of investing in the company’s shares

Given these factors, it is crucial to thoroughly assess the risks associated with investments in NVIDIA shares and make informed decisions based on up-to-date information and the current market conditions.

Summary

NVIDIA’s Q4 fiscal 2025 report shows impressive revenue growth compared to the same period of last year, primarily driven by robust demand for AI infrastructure and data centre products. The company continues to dominate the AI chip market, with its Data Center segment now surpassing the combined divisions of Intel and AMD.

Investors are concerned about the competition from Chinese companies like DeepSeek, which could capture market share from NVIDIA. Additionally, demand from major cloud providers, such as Amazon (NASDAQ: AMZN), Meta (NASDAQ: META), and Microsoft (NASDAQ: MSFT), may decline, potentially leading to an oversupply of products and falling prices.

NVIDIA’s management acknowledges the need to address competitive pressures and regulatory changes. However, in the short term, the company’s success will hinge on the successful introduction of its next-generation Blackwell chips and whether its largest clients will continue to invest heavily in the AI infrastructure.