In short
- Nvidia’s data center revenue rose 75% to $62.3 billion, cementing Nvidia’s dominance at the core of global AI infrastructure spending.
- US stocks recovered modestly, with the tech-heavy Nasdaq outperforming.
- CEO Jensen Huang has argued that AI is still in the early stages of a multibillion-dollar buildout, countering investor concerns that the sector may be overheating.
U.S. stocks edged higher late Wednesday as investors weighed another blockbuster earnings report from Nvidia against ongoing concerns about the size and sustainability of global AI investments.
Nvidia reported fourth-quarter revenue of $68.1 billion, up 73% from a year earlier, driven almost entirely by continued demand for data center infrastructure.
Sales in that segment rose 75% to $62.3 billion, reinforcing the company’s central role in the build-out of artificial intelligence that has underpinned stock markets over the past year.
“With this result, Nvidia has sent a clear message to the market that the expansion of its AI infrastructure is only accelerating,” said Josh Gilbert, market analyst at eToro. Declutter. “Every quarter the skeptics line up, and quarter after quarter, Nvidia has managed to prove them wrong.”
Net income nearly doubled to $43 billion, while gross margins remained at around 75%, reflecting strong pricing power.
The results helped semiconductor stocks rise and supported a modest recovery in broader equity benchmarks after a volatile start to the week.
The Nasdaq outperformed, rising 1.26%, while the S&P 500 closed higher at 0.8% as gains in mega-cap tech stocks offset weakness in more cyclical sectors. Shares of Nvidia rose 1.37% to $198.31 in after-hours trading.
Crypto also saw big valuation gains in blue chip assets including Bitcoin and Ethereum, which rose 7% and 12.5% respectively, ahead of the earnings release.
Government bond yields fell across most maturities, signaling continued caution in interest rate markets even as equities stabilized.
Nvidia’s guidance, meanwhile, added to the sentiment that AI spending remains resilient.
The company expects revenue of around $78 billion for the first quarter of 2027, implying further sequential growth despite excluding any contribution from Chinese data center sales.
Management said customers continue to invest aggressively in scaling inference and deploying so-called agentic AI systems.
The earnings reflected comments from Nvidia CEO Jensen Huang last month at the World Economic Forum in Davos, where he argued that AI is still in the early stages of what he described as the “largest infrastructure expansion in human history.”
Huang said trillions of dollars of additional investment would be needed in energy, chips and data centers to support the technology’s long-term potential, countering fears that the sector is already in a bubble.
Goldman Sachs does prediction that AI investment spending growth will peak in 2026 and then slow, which investors see as a mixed signal: growth will continue, but cash flow visibility can only improve if spending slows.
Cathie Wood’s Ark Invest, on the other hand, has argued that AI infrastructure spending is still in its early stages, viewing the current surge in capital spending by hyperscalers as the start of a multi-year investment cycle rather than a peak.
“Nvidia has committed $95.2 billion in inventory and capacity commitments, nearly double the year-ago level,” Gilbert said. “When the biggest companies in the world are spending money at this rate, you better be prepared to deliver.”
Editor’s note: Comment from eToro analyst Josh Gilbert added
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