Nvidia (NVDA), the world's largest company by market capitalization, reported fourth quarter results after the closing bell on Wednesday in a highly anticipated release amid growing concerns about how big bets on AI will pay off.
Nvidia's quarterly results have become a market-moving event over the past few years, as the chipmaker sells the chips that underpin the AI boom, has deep financial relationships with the Big Tech firms and startups that buy those chips, and remains the most heavily weighted stock in the S&P 500 (^GSPC).
Stocks rose on Wednesday as concerns about AI disruption eased and the rolling sell-offs in software and other sectors paused. Helping lift tech stocks were several new features and partnerships that Anthropic (ANTH.PVT) unveiled, as well as AMD's (AMD) 6-gigawatt GPU deal with Meta (META).
Nvidia's results and guidance that beat estimates suggested that AI demand continues to grow, a powerful signal for the dozens of other tech and software stocks caught in Nvidia's web of influence.
Meta (META), Microsoft (MSFT), and Amazon (AMZN) ticked modestly lower in the wake of Nvidia's earnings report, even as Nvidia CEO Jensen Huang expressed his vote of confidence in their future cash flows and, therefore, capex spending.
The three hyperscalers moved between 0.1% and 0.4% lower in extended trading, while Nvidia stock pared initial gains during the earnings call to rise 0.5%.
"I am confident in their cash flow growing," Huang said of the hyperscalers on the earnings call. "The reason for that is very simple: We have now seen the inflection of agentic AI and the usefulness of agents across the world and enterprises everywhere. You're seeing incredible compute demand because of it in this new world of AI. ... In this new world of AI, compute equals revenues."
In fact, Big Tech giants can't get enough of Nvidia's chips. A growing portion of demand is coming from the so-called hyperscalers like Microsoft, Amazon, and Meta, who now account for more than half of the company's sales in its data center segment.
"Data Center revenue for the fourth quarter was a record $62.3 billion, up 75% from a year ago and up 22% sequentially, driven by the major platform shifts – accelerated computing and AI," Nvidia CFO Colette Kress said in a statement.
"For the fourth quarter, hyperscaler revenue increased and remained our largest customer category at slightly over 50% of Data Center revenue, while growth was led by the rest of our Data Center customers as revenue diversified."
The last time the company specified was portion of its data center sales were to these customers, the company said it was "approximately" 50%.
