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Nvidia is preparing to release its first-quarter earnings for the fiscal year 2025, with a particular focus on the performance of its data center segment. The company, which has become the third-largest company by market capitalization behind Microsoft and Apple, has experienced significant growth due to the AI boom. Since the second quarter of 2023, Nvidia’s revenue growth has accelerated, with its share price more than doubling in one year and increasing by 92% year-to-date in 2024.

The data center and gaming segments are the main focus for Nvidia, with data center revenue seeing a significant surge in recent quarters. The Data Center segment has overtaken Gaming as the biggest revenue contributor for Nvidia due to increased demand for computer GPUs, driven by the Microsoft-led chatbot boom. In the final quarter of fiscal year 2024, Data Center sales accounted for nearly 76% of overall sales. Analysts expect Data Center revenue to reach $21.2 billion for the April quarter of this year, representing a year-on-year growth of 495%.

Nvidia’s non-GAAP gross margin has seen a significant increase, reaching 77% in the final quarter of last year thanks to the lucrative AI chip business. The company anticipates that the gross margin will remain at a similar level in the upcoming earnings report. CEO Jensen Huang has noted that the demand for AI chips is expected to remain strong in 2025 and beyond, with analysts forecasting significant increases in earnings per share and overall revenue for the current quarter.

The announcement of the Nvidia Blackwell Platform in March has garnered significant attention, as this advanced computing technology promises to enable Trillion-Parameter-Scale AI Models. The platform is expected to significantly reduce operating costs and energy consumption for Large Language Models (LLMs). The intensity of competition in AI-led technology among tech companies is expected to continue supporting Nvidia’s growth, with the Blackwell Platform already being adopted by major companies such as Amazon Web Services, Google, and Microsoft.

In early October 2023, the US imposed restrictions on the export of Nvidia’s most popular AI chips to China, impacting Data Center sales in the last quarter of fiscal year 2024. The US Department of Commerce reiterated these restrictions in March, prohibiting the shipment of advanced chips to China. While these restrictions may affect Nvidia’s performance in the first quarter, China is not expected to be a major concern for its overall growth. CEO Jensen Huang has stated that the company is working on redesigning suitable chips for Chinese customers to comply with US regulations.

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