• Nvidia's first-quarter revenue is expected to reach $43 billion, exceeding Wall Street estimates amid strong AI chip demand.
• The company's gross margin forecast of 71% fell short of analyst expectations, impacted by ramping up production for its new Blackwell chips.
• Despite competition from Chinese startup DeepSeek, Nvidia remains optimistic about AI growth and orders for its products.

Nvidia has forecasted first-quarter revenue exceeding Wall Street estimates, anticipating demand for its prominent artificial intelligence (AI) chips to continue unabated as businesses heavily invest in the infrastructure needed for generative AI. The company expects revenues to reach approximately $43 billion, plus or minus 2%, compared to an analyst average estimate of $41.78 billion, according to data compiled by LSEG. This projection signals strong expectations for the sales of Blackwell semiconductors, which CEO Jensen Huang described as having "amazing" demand.

However, the first-quarter gross margin forecast dropped to 71%, a dip from the previous expectation of 72.2%. This decline is related to the company's transitioning to its new chip architecture as they ramp up production of the Blackwell chips, which has proved costly. Nvidia's shares experienced a minor drop of about 1% during extended trading hours after showing significant gains of 3.7% in regular trading sessions. Over the past two years, Nvidia has emerged as a prominent player in AI-related stocks, witnessing an impressive 400% increase in its share value.

Nvidia’s robust performance and forecasts come amidst growing skepticism regarding the sustainability of AI chip demand, especially after the announcement from Chinese AI startup DeepSeek. DeepSeek's claims regarding the efficiency and cost-effectiveness of their AI models led to concerns about potential market competition, with significant market value changes for Nvidia following these developments. Nevertheless, Nvidia's recent earnings report confirmed an adjusted per-share profit of 89 cents, surpassing the anticipated 84 cents, while revenue grew 78% year-on-year to $39.3 billion.

As reported by Reuters, Nvidia's data center segment, which comprises the bulk of its revenue, expanded 93% to $35.6 billion for the previous quarter. The company has also noted that the demand persists for its H20 AI chip, even amid rising competition, indicating solid foundational traction with major cloud service providers.

In summary, while Nvidia faces challenges related to margin compression during its chip production transition, its revenue forecasts and consistent demand signal a robust position in the AI market framework, as stated by analysts from South China Morning Post and Channel News Asia.