Nvidia Confirms AI Explosion Is Not Over Yet, Blackwell Chip Demand Soars

JAKARTA - Nvidia provides a strong signal that demand for their artificial intelligence (AI) chips remains high. In its financial report on Wednesday 26 February, Nvidia projects solid growth for the first quarter of 2025. The company from Santa Clara, California confirmed that the order for their latest generation AI chip, Blackwell, is huge.

This prediction helps ease concerns about a slowdown in AI hardware spending, which comes after China's AI startup DeepSeek claims to have developed an AI model capable of rivaling competitors from the West at lower costs.

Nvidia shares had increased 3.7% in regular trading before fluctuating in trading sessions after working hours. In the last two years, Nvidia's shares have jumped more than 400%, making them the largest beneficiary of AI-based stock rally.

Nvidia CEO Jensen Huang expressed optimism by saying that "AI is evolving at a speed of light," adding that demand for Blackwell is "very extraordinary." Huang also revealed that large-scale Blackwell chip production has been successful, with sales reaching billions of dollars just in the first quarter of its launch.

Nvidia is currently experiencing a significant product transition, switching to its new chip architecture, Blackwell. In addition to selling individual chips, the company is now offering a complete AI computing system that includes graphics chips, processors, and network devices.

In the fourth quarter of 2024, Nvidia earned USD 11 billion (IDR 180.9 trillion) of Blackwell-based products, covering about 50% of their total data center revenue. Overall, Nvidia's data center revenue grew 93% to USD 35.6 billion, surpassing analyst estimates of USD 33.59 billion.

For the first quarter of 2025, Nvidia projected a total revenue of 43 billion US dollars, higher than the average analyst estimate of 41.78 billion US dollars.

However, the transition to Blackwell also carries its own challenges. The company expects their gross profit margin to drop to 71%, lower than Wall Street's forecast of 72.2%. However, Nvidia's CFO, Total Kress, is optimistic that the margin will return to around 75% by the end of fiscal year after Blackwell's production increases and costs decrease.

AI's stock rally weakened last month after DeepSek suddenly surfaced, causing Nvidia's market cap to drop by $593 billion in a single day "loss the biggest value US companies have ever experienced in a day. This raises the question of whether demand for AI chips will continue, especially given the huge costs that have been incurred by tech giants like Microsoft and Meta.

Microsoft has allocated USD 80 billion for AI investments in this fiscal year, while Meta plans to spend up to USD 65 billion. An analyst report briefly said that Microsoft canceled several major data center rentals in the US, sparking speculation of potential oversupply.

However, according to a Reuters report on Monday, February 24, Chinese companies actually increased orders for Nvidia's H20 AI chip, driven by growing demand for low-cost AI models from DeepSek.

"Despite DeepSek's breakthrough, Nvidia's momentum among major cloud service providers is continuing," said Third Bridge analyst Lucas Kep.

In another news benefiting Nvidia, CFO totaling Kress revealed that the Stargate data center project announced by former US President Donald Trump would use Nvidia's Ethernet Spectrum X technology for their network.

Overall, Nvidia posted adjusted earnings per share of 0.89, the US dollar exceeded analyst estimates of $ 0.84 per share. The fourth quarter's revenue increased 78% to US $ 39.3 billion, higher than the estimated US $ 38.04 billion.

With a surge in demand for AI chips and high adoption of Blackwell products, Nvidia continues to show its dominance in the global AI industry, although competition is getting tighter.