U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.43%

By Asa Fitch

Nvidia reported sharply rising sales and earnings in its latest quarter, indicating that spending on its artificial-intelligence chips hasn't abated after a boom that has lasted more than two years.

Driven by AI chips, Nvidia said sales rose 78% to $39.3 billion in the quarter. Net income rose 80% to $22 billion. Both figures came in ahead of Wall Street's expectations in a FactSet survey of analysts.

The company also gave an outlook for its current quarter that exceeded expectations. It forecast around $43 billion of sales for the period, above the $42 billion analysts had been expecting.

Nvidia's shares were flat in after-hours trading. Chief Executive Jensen Huang has shepherded Nvidia through an unprecedented climb during the AI boom, sending its valuation above $3 trillion. The boom has also made Huang into an instantly-recognizable visionary to many, a tech oracle who wears black leather jackets as he expounds about a future filled with humanoid robots, self-driving cars and genius-level AI chatbots.

Nvidia's growth was powered by the insatiable appetite for its AI chips, which Huang and the company worked to develop many years before AI became a popular craze or a commercially attractive technology. The suddenness of the AI boom's takeoff in late 2022 left its competition scrambling to catch up, while Nvidia could focus on keeping its lead and plotting out the future.

Big tech companies including Alphabet, Microsoft, Meta and Amazon.com lined up to buy chips, competing with each other to create ever-more-human chatbots and image-generation tools. Nvidia's sales have multiplied: Just two years ago, in the 2023 February quarter, they were around $6 billion.

Although competitors such as Advanced Micro Devices and Broadcom have challenged Nvidia's perch, investors saw little reason for concern. Nvidia's value crossed the $1 trillion mark in 2023 and then $2 trillion in February 2024. It hit $3 trillion just a few months later.

The emergence this year of DeepSeek, a Chinese company with AI models it said required fewer of Nvidia's chips, touched off the first significant scare for the company since the boom began. Nvidia's shares fell 17% in one trading day late last month, erasing more than $590 billion market value.

Some in the chip industry believe DeepSeek's advances could be a benefit to Nvidia because such models require more resources for "inference" work, something well suited to Nvidia's most advanced chips. Nvidia said last year that more than 40% of its data-center revenue was coming from inference, quelling fears that its chips wouldn't be used as much for such purposes.

Big tech companies subsequently laid out plans to spend record amounts of money on AI, which eased concerns about chip demand. Nvidia's shares have come back since their fall but are still down slightly for the year.

Nvidia's continued success hinges in large part on Blackwell, its latest generation of AI chips that are just starting to roll out. The company said in November it expected several billion dollars of revenue from Blackwell chips in its latest quarter, suggesting demand and production were healthy despite a manufacturing hiccup the company flagged last year.

Nvidia is expected to reveal more details about future chips at its annual conference next month in California. The generation of AI chips after Blackwell is called "Rubin," and is expected to be in production in 2026.

U.S. government restrictions on AI chip sales pose another challenge to Nvidia's steadily surging sales. The Biden administration imposed caps on AI chip sales to certain countries in January, despite objections from Nvidia and other tech companies. The curbs aimed to limit China's ability to access the most powerful AI chips out of concern that they could be used in cyberwarfare and to improve the country's military capabilities.

Write to Asa Fitch at asa.fitch@wsj.com

By WSJ Staff

Nvidia shares pared early postmarket gains after the chip giant reported earnings, trading around $130 after closing at 4 p.m. ET at $131.28.

The key figures:

• Nvidia reported revenue of $39.3 billion, up 78% from the prior-year quarter. The company was expected to report $38.1 billion in sales for the January quarter, according to a FactSet-compiled consensus of analyst estimates. Data-center revenue came in at $35.6 billion, up 93%.
• Earnings per share came in at 89 cents per share. Net income for the quarter was $22.09 billion. Analysts expected $19.42 billion of net income, up more than 50% from a year earlier.

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