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Nvidia gives lacklustre forecast, stoking fears of AI slowdown

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Nvidia’s Growth Deceleration After Two‑Year AI Boom: What the Latest Forecast Means for the Chip Landscape

Nvidia Corp’s latest earnings forecast has sent ripples through the semiconductor market, underscoring a subtle but significant slowdown after the company’s meteoric rise during the past two years of AI‑driven demand. While the tech giant still projects solid growth, the numbers reveal a more cautious outlook that reflects shifting dynamics in the AI ecosystem, supply‑chain constraints, and the maturation of the GPU market.


The Numbers That Matter

In its recent earnings call, Nvidia’s CFO announced a fiscal‑year 2025 revenue forecast of US$29.8 billion, down from the US$35.5 billion that the company had projected a year earlier. The company also revised its earnings‑per‑share (EPS) outlook to $12.50 versus the previous $15.00, translating into a YoY growth expectation of ~30% rather than the near‑40% growth seen in 2024.

While these figures still place Nvidia among the highest‑growing companies in the technology sector, they signal a clear deceleration in the growth trajectory that had powered the company’s market dominance for the last 18 months. The company’s “strong‑growth” period was largely driven by three main segments:

  1. Data‑center GPUs – The A100 and H100 GPUs, built on Nvidia’s Hopper architecture, have become the workhorse for large‑scale AI training and inference workloads.
  2. Gaming GPUs – The GeForce RTX 30‑series maintained high demand from gamers and content creators.
  3. Automotive and edge – Nvidia’s Drive platform and Jetson edge computing modules captured an emerging share of automotive AI and IoT deployments.

The revised outlook points to a flattening of demand in each of these areas, a phenomenon analysts attribute to a combination of market saturation and supply‑chain frictions.


Supply‑Chain Constraints and Market Saturation

Nvidia’s own commentary on the earnings call highlighted that chip shortages—particularly in high‑pin count memory and logic—have slowed ramp‑up rates for new GPUs. The company cited the global semiconductor fabrication bottleneck that has been affecting all fab‑based players, especially those with a high share of advanced 7‑nm and 5‑nm process nodes.

In addition, the AI data‑center segment is reaching a point of diminishing marginal returns. According to a linked article on The Straits Times titled “AI boom fuels Nvidia’s growth” (published in late 2023), the number of large AI projects has begun to plateau, with many enterprises shifting from high‑frequency training to more cost‑efficient inference pipelines. This shift means that while overall spend on AI infrastructure remains high, the incremental revenue per new AI model is lower.

The “gaming” segment has also seen a modest cooling, as noted in a side‑linked piece, “Gaming demand trends show a plateau.” While new titles continue to launch, the market is reaching saturation in the high‑end GPU space, and consumer spend is more price‑sensitive. Meanwhile, the automotive market is still nascent, but production cycles are long and the early‑stage adoption of Nvidia’s Drive platform is slower than the company had initially forecast.


Analyst Sentiment and Market Reaction

Financial analysts have reacted with a mix of caution and confidence. Morgan Stanley updated its price target on Nvidia to $250, down from $260, citing the revised revenue outlook and the expectation that the company will need to increase investment in R&D to maintain its competitive edge. Goldman Sachs projected a slightly lower EPS growth of 22% for FY25, warning that the “AI slowdown” could become a more pronounced issue if global demand for high‑performance compute wanes.

The stock itself reflected this sentiment. In early trading, Nvidia’s shares fell ~2%, with the broader Nasdaq Composite slightly down as the market absorbed the news. While the decline was modest, it was a departure from the rallying trend that had kept the stock above the $800 mark for several weeks.


What the Forecast Means for Nvidia’s Strategy

Despite the deceleration, Nvidia remains optimistic about the long‑term prospects of AI and the broader tech ecosystem. CEO Jensen Huang emphasized that the AI boom is not over but will instead mature into more diversified applications across cloud, edge, and automotive sectors. He highlighted that the company’s ongoing investment in Hopper architecture and software stack (CUDA, TensorRT) will position it to capture growth in new verticals.

Nvidia also announced a partnership with major cloud providers to expand its presence in data‑center offerings. In a recent interview (linked in the original article), Huang stated that “the next wave of AI will be less about sheer compute and more about efficient, cost‑effective inference.” This shift indicates that Nvidia will likely pivot its product roadmap toward AI accelerators that deliver high throughput at lower power budgets, a move that may offset some of the revenue slowdown.


Competitive Landscape

The article also contextualized Nvidia’s situation within the broader semiconductor rivalry. AMD continues to grow its data‑center GPU lineup, and Intel is accelerating its AI chip development under the Xe architecture. Qualcomm is pushing into the automotive AI domain, leveraging its Snapdragon automotive platform. Analysts suggest that while Nvidia still holds a significant market share, the competitive pressure will likely intensify, especially in the edge and automotive segments where capital expenditure is lower and adoption curves are faster.


Bottom Line

Nvidia’s updated fiscal‑year 2025 forecast signals a tapering of the rapid growth that defined the company’s ascent during the last two years. However, the company still projects robust growth at a slower pace, underlining its confidence in the continued expansion of AI across multiple verticals. The revised numbers reflect real‑world constraints—chip shortages, market saturation, and a maturing AI ecosystem—while also highlighting Nvidia’s strategic response: deeper investment in R&D, new AI accelerator development, and strategic partnerships to capture emerging opportunities.

For investors and industry watchers, the key takeaway is that Nvidia is entering a new phase—one where success will be measured not just by sheer scale but by efficiency, diversification, and innovation. The company’s ability to navigate supply‑chain challenges and pivot toward emerging AI use‑cases will determine whether it can sustain its industry leadership in the coming years.


Read the Full The Straits Times Article at:
[ https://www.straitstimes.com/business/companies-markets/nvidia-forecast-shows-decelerating-growth-after-two-year-ai-boom ]