EPS of $0.89 increased by 32.4% from previous year
Gross margin of 73.0%
Net income of 22.09B
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NVIDIA Corporation (NVDA.NE) QQ4 2025 Earnings Analysis: AI Compute Leader Delivers Record Profitability in Data Center and Cloud Markets
Executive Summary
NVIDIA reported a standout QQ4 2025 with revenue of $39.331 billion, up 30.93% year-over-year and 12.11% sequentially, underpinned by exceptionally high gross margins (~73%) and dominant profitability. The company generated $22.091 billion in net income and an EPS of $0.90 (diluted $0.89), supported by a robust operating margin of 61.11% and EBITDA of $25.821 billion. Free cash flow reached approximately $15.55 billion, while operating cash flow was about $16.63 billion, highlighting an exceptionally strong cash-generation engine. NVIDIA also exhibits a fortress balance sheet: total assets of $111.6 billion, total stockholders’ equity of $79.3 billion, and a net cash position of roughly $1.68 billion after accounting for debt, with substantial liquidity from both cash and short-term investments (~$43.21 billion combined). Current and quick ratios stand at 4.44 and 3.88 respectively, indicating substantial short-term liquidity. The revenue and earnings strength are driven by elevated demand for AI compute in data-center applications, including AI training and inference workloads, hyperscale cloud deployment, and enterprise AI initiatives. Management commentary on the call (where available) typically reinforces ongoing AI infrastructure investments, although the dataset provided does not include transcript quotes. Given the elevated multiple metrics (e.g., P/E around mid-30s, price-to-free-cash-flow well above 180x) and sector-wide enthusiasm for AI-capable GPUs, the stock remains a high-conviction, growth-oriented position with continued upside tied to AI adoption, software-enabled AI platforms, and data-center expansion. Investors should monitor AI capex momentum among hyperscalers, potential regulatory/export controls dynamics, and any signs of a cyclical easing in data-center GPU demand.
Cash flow and liquidity
- Operating cash flow: $16.629 billion
- Free cash flow: $15.552 billion
- Net income to free cash flow conversion strong given high profitability
- Net cash position: Net debt = -$1.681 billion (i.e., net cash); Cash and cash equivalents ~$8.589 billion; Short-term investments ~$34.621 billion; Total cash & short-term investments ~$43.21 billion
- Capital allocation: Free cash flow supports buybacks and potential strategic investments; Share repurchases of approximately $7.811 billion occurred alongside $245 million in dividends paid
Balance sheet health and efficiency
- Total assets: $111.601 billion; Total liabilities: $32.274 billion; Total stockholders’ equity: $79.327 billion
- Current ratio: 4.44; Quick ratio: 3.88; Debt ratios remain modest (Debt to capitalization ~11.5%; Interest coverage ~394x)
- Cash conversion metrics indicate efficient working capital management (DSO ~52.8 days; inventory days ~85.5; CCC ~84.8 days)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
39.33B
30.93%
12.11%
Gross Profit
28.72B
27.24%
9.81%
Operating Income
24.03B
28.92%
9.90%
Net Income
22.09B
33.09%
14.41%
EPS
0.90
32.35%
13.92%
Key Financial Ratios
currentRatio
4.44
grossProfitMargin
73%
operatingProfitMargin
61.1%
netProfitMargin
56.2%
returnOnAssets
19.8%
returnOnEquity
27.8%
debtEquityRatio
0.13
operatingCashFlowPerShare
$0.68
freeCashFlowPerShare
$0.64
dividendPayoutRatio
1.11%
priceToBookRatio
36.56
priceEarningsRatio
32.82
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript highlights unavailable in the provided data. The earnings transcript is listed as empty, so no management quotes or theme-specific commentary could be incorporated from the call. If and when transcript access is available, include quotes on AI growth trajectory, product mix resilience, AI software monetization, and any updated guidance.
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Forward Guidance
Forward guidance is not provided in the supplied dataset. In the absence of explicit management commentary, the outlook relies on the momentum in AI datacenter demand and hyperscale cloud capex. Given NVIDIA’s leadership in AI compute, continued expansion of AI model training/inference workloads, and strong free cash flow generation, the baseline assumption supports continued double-digit revenue growth and sustained high margins if AI compute demand remains robust and supply constraints do not intensify. Key factors to monitor include: (1) hyperscaler AI capex cycles and data-center spending patterns, (2) potential regulatory/export controls affecting international sales, (3) supplier and supply chain dynamics affecting GPU availability, (4) product cycle dynamics and the launch/uptake of new NVIDIA architectures and software platforms, and (5) competitive landscape and pricing pressure from AMD/Intel and OEMs. Investors should watch quarterly commentary on data-center mix, software monetization under NVIDIA AI Enterprise, and any changes to capital allocation strategy.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NVDA.NE Focus
73.03%
61.10%
27.80%
32.82%
MSFT.NE
69.60%
43.10%
8.21%
2.03%
AMD.NE
50.70%
11.40%
0.84%
13.38%
AAPL.NE
46.20%
31.20%
25.90%
6.43%
GOOG.NE
57.90%
32.10%
8.16%
20.38%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
NVIDIA remains a premier beneficiary of AI-driven infrastructure demand, with an exceptionally strong balance sheet and superior profitability. The QQ4 2025 results reinforce a durable revenue trajectory underpinned by data-center AI compute and software-enabled AI platforms. While the current multiple reflects high growth expectations, the combination of robust free cash flow generation, strategic software monetization, and expanding addressable markets supports a favorable long-term investment thesis. Investors should maintain conviction on NVIDIA’s leadership in AI acceleration while monitoring hyperscale capex cycles, regulatory developments, and competitive dynamics. A disciplined approach to capital allocation (validated buybacks, strategic investments, and ongoing R&D) will be key to sustaining value in a rapidly evolving AI ecosystem.
Key Investment Factors
Growth Potential
AI compute leadership across data centers, cloud, and enterprise workflows; expanding addressable TAM through software-enabled AI platforms (e.g., NVIDIA AI Enterprise), Omniverse ecosystem, and enterprise-grade virtualization (vGPU). Strong secular tailwinds from AI model training/inference and accelerated computing cadence support durable revenue growth and high-margin profitability.
Profitability Risk
Regulatory/export controls and geopolitical tensions impacting China and other markets; cyclical variability in data-center capex; competition from AMD/Intel in GPUs and accelerators; potential supply-chain constraints or component shortages; macroeconomic headwinds that could temper hyperscaler investment in AI infrastructure; reliance on a few large hyperscalers for a meaningful portion of revenue.
Financial Position
Very solid liquidity with net cash position, sizable holdings in cash and short-term investments, and robust free cash flow generation. Low leverage and very high interest-coverage provide a strong balance sheet cushion amidst macro volatility. The company’s capital allocation strategy (buybacks, dividends, and selective investments) should support shareholder value while maintaining financial flexibility.
SWOT Analysis
Strengths
Market leadership in AI compute and GPUs with dominant position in data-center accelerate computing