Nvidia (NASDAQ:NVDA) Q1 Sales Beat Estimates But Quarterly Revenue Guidance Misses Expectations

Anthony Lee

Wed, May 28, 2025, 2:29 PM 4 min read

Leading designer of graphics chips Nvidia (NASDAQ:NVDA) reported Q1 CY2025 results exceeding the market’s revenue expectations , with sales up 69.2% year on year to $44.06 billion. On the other hand, next quarter’s revenue guidance of $45 billion was less impressive, coming in 1.6% below analysts’ estimates. Its non-GAAP profit of $0.81 per share was 8% above analysts’ consensus estimates.

Is now the time to buy Nvidia? Find out in our full research report.

Nvidia (NVDA) Q1 CY2025 Highlights:

Revenue: $44.06 billion vs analyst estimates of $43.28 billion (69.2% year-on-year growth, 1.8% beat)
Datacenter Revenue: $39.1 billion vs analyst estimates of $39.2 billion (73% year-on-year growth, slight miss)
Adjusted EPS: $0.81 vs analyst estimates of $0.75 (8% beat)
Adjusted Operating Income: $23.28 billion vs analyst estimates of $22.04 billion (52.8% margin, 5.6% beat)
Revenue Guidance for Q2 CY2025 is $45 billion at the midpoint, below analyst estimates of $45.75 billion
Operating Margin: 49.1%, down from 64.9% in the same quarter last year
Free Cash Flow Margin: 59.3%, up from 57.5% in the same quarter last year
Inventory Days Outstanding: 59, down from 115 in the previous quarter
Market Capitalization: $3.30 trillion

“Our breakthrough Blackwell NVL72 AI supercomputer — a ‘thinking machine’ designed for reasoning— is now in full-scale production across system makers and cloud service providers,” said Jensen Huang, founder and CEO of NVIDIA.

Company Overview

Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ:NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Nvidia’s 66% annualized revenue growth over the last five years was incredible. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Nvidia’s annualized revenue growth of 140% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Nvidia reported magnificent year-on-year revenue growth of 69.2%, and its $44.06 billion of revenue beat Wall Street’s estimates by 1.8%. Despite the beat, this was its third consecutive quarter of decelerating growth, indicating that the current upcycle is potentially losing some steam. Company management is currently guiding for a 49.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 43% over the next 12 months, a deceleration versus the last two years. Still, this projection is eye-popping given its scale and indicates the market is baking in success for its products and services.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.

Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, Nvidia’s DIO came in at 59, which is 47 days below its five-year average. At the moment, these numbers show no indication of an excessive inventory buildup.

Key Takeaways from Nvidia’s Q1 Results

We were impressed by Nvidia’s strong improvement in inventory levels. We were also excited its revenue, operating income, and EPS outperformed Wall Street’s estimates. It wasn't a perfect quarter, though. The company's Datacenter revenue missed by a slight amount, and its revenue guidance for next quarter missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.8% to $138.56 immediately after reporting.

Nvidia had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.

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