Nvidia Soars 4.93% on Strong Earnings, Market Dominance

On April 23, 2025, Nvidia's stock rose by 4.93% in pre-market trading, reflecting strong investor confidence in the company's recent developments and market position.

Nvidia's financial performance in 2024 was exceptional, with a 114% year-over-year increase in revenue to $130.5 billion and a 145% surge in net profit to $72.8 billion. This translates to a daily net profit of $2 billion and a quarterly profit exceeding the annual profits of Intel and AMD combined. The company's 75% gross margin is significantly higher than that of Apple (45%) and Tesla (18%), indicating a robust business model.

Nvidia's dominance in the data center market, with a 95% share, is a key driver of its profitability. Major cloud service providers like Microsoft Azure and Google Cloud, as well as AI companies like OpenAI, rely heavily on Nvidia's GPUs. This market dominance allows Nvidia to command premium pricing for its products, such as the H100 chip, which was priced at $35,000, a significant increase from the previous generation's $6,999.

However, Nvidia faces challenges in the Chinese market due to U.S. export restrictions. The H20 chip, designed for the Chinese market, has limited performance and high pricing, and future sales may require special permits. This could lead to a significant AI computing power gap in China, impacting the development of large-scale AI models.

In response to these challenges, Chinese companies like Huawei and Henglight are developing competitive AI chips. Huawei's Ascend 910B and Henglight's DCU have shown promising performance in training efficiency and power consumption, with some models approaching the performance of Nvidia's H100. These developments indicate a growing threat to Nvidia's market dominance in the AI chip sector.