Is NVIDIA's Q4 Financial Report Hot or Cold? TSMC & SK Hynix's Shares Tell

TradingKey – The much-anticipated earnings report for NVIDIA's fourth quarter of FY 2025, one of the most important earnings reports globally, has finally been released. Strong sales of AI chips have supported NVIDIA in achieving its highest quarterly revenue to date.

However, the market still seems dissatisfied: NVIDIA's stock price slightly declined after the market closed, and stocks of Asian supply chain companies like Taiwan's TSMC and SK Hynix also dropped.

On Thursday, February 27th, the stock prices of NVIDIA's supply chain manufacturers in Taiwan declined. Among them, TSMC (2330.TW) fell by 1.89%, Hon Hai Precision Industry Co., Ltd. (2317.TW) dropped by 3.60%, MediaTek Inc. (2454.TW) fell by 2.88%, Compal Electronics Inc. (2382.TW) dropped by 3.65%, Wistron Corporation (3231.TW) fell by 2.61%, and Inventec Corporation (2356.TW) dropped by 3%.

NVIDIA’s supply chain stocks in Japan and South Korea also had a tough day. SK Hynix (000660.KS), the world's second-largest memory chip maker, closed down by about 2%, Samsung Electronics Co., Ltd. (005930.KS) fell by 0.53%, and Advantest Corporation (6857.JP) dropped by about 2%.

After the market closed on the 26th, NVIDIA released its fourth-quarter results for fiscal year 2025, which ended on January 26, 2025. The results were a "mixed bag":

Revenue increased by 78% YoY, and adjusted earnings per share rose by 71% YoY, both exceeding expectations. NVIDIA expects the revenue growth rate for the next quarter to be between 62.1% and 68.7%, which aligns with expectations. However, the highest gross profit margin came in at 71.5%, slightly lower than the expected 72%.

Additionally, on the 26th, Nomura downgraded its rating of Taiwanese stocks in Asian allocations from "tactical overweight" to "neutral." Nomura cited concerns over tariffs, chip sector restrictions, greater scrutiny of AI themes, and elevated valuations and investor positioning.

NVIDIA's Earnings Report: Neither Hot nor Cold

Although the overall performance exceeded market expectations, many analysts noted that NVIDIA's earnings report did not bring much surprise to the market and was generally "neither hot nor cold."

On the "hot" side, some analysts pointed out that while there were concerns about the impact of the DeepSeek model and the challenges faced by the early deployment of Blackwell, NVIDIA's performance reaffirmed its leadership in the AI field.

NVIDIA's CEO stated that the DeepSeek model is an excellent innovation, and future inference models will consume even more computing resources.

TradingKey analyst Peter Petrov highlighted that revenue from the newest product, Blackwell, was approximately $11 billion—a truly impressive figure, considering the product was introduced less than a year ago.

Petrov noted that NVIDIA's growth remains robust, driven by strong demand for Blackwell. Currently, NVIDIA is trading at a PE ratio of around 44x, and with expected growth of over 60%, the valuation appears attractive.

On the "cold" side, Petrov mentioned two aspects that may raise concerns for investors:

First, the gross margin has decreased to 73%, down from 74.6% in the previous quarter and 76.7% a year ago. The margin is expected to dip further to 70.6% next quarter. New products are more complex and costlier to produce, which is driving the gross margin down. This decline might also indicate limited pricing power against major customers.

Another concern is the increase in accounts receivable, which rose from $10 billion to $23 billion over the past year. This negatively impacts free cash flow, as clients are slow to pay NVIDIA.