−Removed: Other than the risk factors listed below, there have been no material changes from the risk factors previously described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.
−Removed: Purchasing or owning NVIDIA common stock involves investment risks including, but not limited to, the risks described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2024, and below.
+Added: Other than the risk factors listed below, there have been no material changes from the risk factors previously described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 and Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended April 28, 2024.
+Added: Purchasing or owning NVIDIA common stock involves investment risks including, but not limited to, the risks described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2024, and Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended April 28, 2024, and below.
Any one of those risks could harm our business, financial condition and results of operations or reputation, which could cause our stock price to decline.
Additional risks, trends and uncertainties not presently known to us or that we currently believe are immaterial may also harm our business, financial condition, results of operations or reputation.
−Removed: Failure to estimate customer demand accurately has led and could lead to mismatches between supply and demand.
+Added: Long manufacturing lead times and uncertain supply and component availability, combined with a failure to estimate customer demand accurately, has led and could lead to mismatches between supply and demand.
We use third parties to manufacture and assemble our products, and we have long manufacturing lead times.
−Removed: We are not provided guaranteed wafer, component and capacity supply, and our supply deliveries and production may be non-linear within a quarter or year.
−Removed: If our estimates of customer demand are inaccurate, as we have experienced in the past, there
−Removed: could be a significant mismatch between supply and demand.
+Added: We are not provided guaranteed wafer, component or capacity supply, and our supply deliveries and production may be non-linear within a quarter or year.
+Added: If our estimates of customer demand are inaccurate, as we have experienced in the past, there could be a significant mismatch between supply and demand.
This mismatch has resulted in both product shortages and excess inventory, has varied across our market platforms, and has significantly harmed our financial results.
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• rapidly changing technology or customer requirements;
−Removed: • the availability of sufficient data center capacity and energy for customers to procure;
+Added: • the availability of sufficient data center capacity or energy for customers to procure;
• new product introductions and transitions resulting in less demand for existing products;
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• business decisions made by third parties;
−Removed: • the demand for accelerated computing or AI-related cloud services;
+Added: • the demand for accelerated computing, AI-related cloud services, or large language models;
• changes that impact the ecosystem for the architectures underlying our products and technologies;
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• government actions or changes in governmental policies, such as export controls or increased restrictions on gaming usage.
−Removed: Our overall revenue, driven by data center compute, continued to grow through the first quarter of fiscal year 2025.
−Removed: We continue to gather customer demand indications across several product transitions.
−Removed: We have demand visibility for our data center products, including the recently announced Blackwell GPU architecture.
−Removed: We have previously increased our supply and capacity purchases with existing suppliers with planned receipts later this year.
−Removed: We continue to add new vendors and have entered and may continue to enter into prepaid manufacturing and capacity agreements to supply both current and future products.
−Removed: The increased purchase volumes and number of suppliers and integration of new vendors into our supply chain may create more complexity and execution risk.
−Removed: Our purchase commitments and obligations for inventory and manufacturing capacity at the end of the first quarter of fiscal year 2025 continued to be impacted by shortening lead times for certain components.
−Removed: We may incur inventory provisions or impairments if our inventory or supply or capacity commitments exceed demand for our products or demand declines.
−Removed: While supply for H100 continued to improve, we are still constrained on H200.
−Removed: Our next generation data center architecture, Blackwell, is in production, and we plan on shipping customer samples in the second quarter.
−Removed: We expect to ramp customer shipments of Blackwell in the second half of the fiscal year.
−Removed: We believe the initial demand for Blackwell is well ahead of the projected supply for this fiscal year.
−Removed: We expect supply constraints for our Blackwell offerings will continue into next year.
+Added: We continue to increase our supply and capacity purchases with existing and new suppliers to support our demand projections.
+Added: With these additions, we have also entered and may continue to enter into prepaid manufacturing and capacity agreements to supply both current and future products.
+Added: The increased purchase volumes and integration of new suppliers and contract manufacturers into our supply chain may create more complexity in managing multiple suppliers with variations in production planning, execution and logistics.
+Added: Our expanding product portfolio and varying component compatibility and quality may lead to increased inventory levels.
+Added: We have incurred and may in the future incur inventory provisions or impairments if our inventory or supply or capacity commitments exceed demand for our products or demand declines.
Our customer orders and longer-term demand estimates may change or may not be correct, as we have experienced in the past.
−Removed: Product transitions are complex and can impact our revenue as we often ship both new and prior architecture products simultaneously and we and our channel partners prepare to ship and support new products.
−Removed: Due to our product introduction cycles, we are almost always in various stages of transitioning the architectures of our Data Center, Gaming, and Professional Visualization products.
−Removed: We have begun a broader and faster Data Center product launch cadence to meet a growing and diverse set of AI opportunities.
−Removed: The increased frequency of these transitions may magnify the challenges associated with managing our supply and demand due to long manufacturing lead times.
+Added: Product transitions are complex and we often ship both new and prior architecture products simultaneously as our channel partners prepare to ship and support new products.
+Added: We may be in various stages of transitioning the architectures of our Data Center, Gaming, Professional Visualization and Automotive products.
+Added: The computing industry is experiencing a broader and faster launch cadence of accelerated computing platforms to meet a growing and diverse set of AI opportunities.
+Added: We have introduced a new cadence of our Data Center architectures where we seek to complete a new GPU computing architecture each year and we are providing a greater variety of Data Center offerings.
+Added: The increased frequency of these transitions and the larger number of products and product configurations may magnify the challenges associated with managing our supply and demand.
Qualification time for new products, customers anticipating product transitions and channel partners reducing channel inventory of prior architectures ahead of new product introductions can reduce or create volatility in our revenue.
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If we are unable to execute our architectural transitions as planned for any reason, our financial results may be negatively impacted.
−Removed: The increasing frequency and complexity of newly introduced products could result in unanticipated quality or production issues that could increase the magnitude of inventory provisions, warranty, or other costs or result in product delays.
−Removed: Deployment of new products to customers creates additional challenges due to the complexity of our technologies, which has impacted and may in the future impact the timing of customer purchases or otherwise impact our demand.
+Added: The increased frequency and complexity of newly introduced products could result in unanticipated quality or production issues that could increase the magnitude of inventory provisions, warranty, or other costs or result in product delays.
+Added: For example, we executed a change to the Blackwell GPU mask to improve production yield.
+Added: Our gross margins in the second quarter of fiscal year 2025 were negatively impacted by inventory provisions for low-yielding Blackwell material and they may continue to be impacted in the future.
+Added: We incur significant engineering development resources for new products, and changes to our product roadmap may impact our ability to develop other products or adequately manage our supply chain cost.
+Added: Customers may delay purchasing existing products as we increase the frequency of new products or may not be able to adopt our new products as fast as forecasted, both impacting the timing of our revenue and supply chain cost.
While we have managed prior product transitions and have sold multiple product architectures at the same time, these transitions are difficult, may impair our ability to predict demand and impact our supply mix, and may cause us to incur additional costs.
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We have also written down our inventory, incurred cancellation penalties, and recorded impairments and may have to do so in the future.
−Removed: These impacts were amplified by our placement of non-cancellable and non-returnable purchasing terms well in advance of our historical lead times and could be exacerbated if we need to make changes to the design of future products.
−Removed: The risk of these impacts has increased and may continue to increase as our purchase obligations and prepaids have grown and are expected to continue to grow and become a greater portion of our total supply.
+Added: These impacts would be amplified by our placement of any non-cancellable and non-returnable purchase orders placed in advance of our historical lead times and could be exacerbated if we need to make changes to the design of future products.
+Added: these impacts has increased and may continue to increase as our purchase obligations and prepaids have grown and are expected to continue to grow and become a greater portion of our total supply.
All of these factors may negatively impact our gross margins and financial results.
−Removed: We build technology and introduce products for new and innovative use cases and applications, such as NVIDIA DGX Cloud services, NVIDIA AI Foundations, Omniverse platform, LLMs, and generative AI models.
−Removed: Our demand estimates for new use cases, applications, and services can be incorrect and create volatility in our revenue or supply levels, and we may not be able to generate significant revenue from these use cases, applications, and services.
+Added: Demand estimates for our new products, applications, and services can be incorrect and create volatility in our revenue or supply levels.
+Added: We may not be able to generate significant revenue from them.
Recent technologies, such as generative AI models, have emerged, and while they have driven increased demand for Data Center, the long-term trajectory is unknown.
Because our products may be used in multiple use cases and applications, it is difficult for us to estimate with any reasonable degree of precision the impact of generative AI models on our reported revenue or forecasted demand.
−Removed: Additionally, we started shipping our CPU product offerings, the Grace CPU and Grace Hopper Superchips, in the third quarter of fiscal year 2024.
−Removed: Our inability to accurately predict our CPU demand may create volatility in our revenue or supply levels.
Challenges in estimating demand could become more pronounced or volatile in the future on both a global and regional basis.
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Failure by developers, customers, and other third parties to build, enhance, and maintain applications that leverage our platforms, or failure by third-party content providers or publishers to make their content available on reasonable terms or at all for use by our customers or end users on our platforms, could adversely affect customer demand.
−Removed: International sales and operations are a significant part of our business, which exposes us to risks that could harm our business.
−Removed: We sell our products internationally, and we also have operations and conduct business internationally.
−Removed: Our semiconductor wafers are manufactured, assembled, tested and packaged by third parties located outside of the United States, and we generated 48% of our revenue during the first quarter in fiscal year 2025 from sales outside the United States.
−Removed: We have not received licenses from the USG to ship restricted products to China.
−Removed: We ramped new products designed specifically for China that do not require an export control license.
−Removed: Our Data Center revenue in China is down significantly from the level prior to the imposition of new export control restrictions in October 2023.
−Removed: We expect the market in China to remain very competitive going forward.
−Removed: The global nature of our business subjects us to a number of risks and uncertainties, which have had in the past and could in the future have a material adverse effect on our business, financial condition and results of operations.
−Removed: These include domestic and international economic and political conditions in countries in which we and our suppliers and manufacturers do business, government lockdowns to control case spread of global or local health issues, differing legal standards with respect to protection of IP and employment practices, different domestic and international business and cultural practices, disruptions to capital markets, counter-inflation policies, currency fluctuations, natural disasters, acts of war or other military actions, terrorism, public health issues and other catastrophic events.
We receive a significant amount of our revenue from a limited number of partners and distributors and we have a concentration of sales to customers who purchase directly or indirectly from us, and our revenue could be adversely affected if we lose or are prevented from selling to any of these customers.
We receive a significant amount of our revenue from a limited number of customers within our distribution and partner network.
−Removed: Sales to one direct customer, Customer A, and sales to another direct customer, Customer B, represented 13% and 11% of total revenue, respectively, for the first quarter of fiscal year 2025.
−Removed: Both were attributable to the Compute & Networking segment.
+Added: Sales to direct Customers, A, B, C and D represented 14%,11%, 11% and 10% of total revenue, respectively, for the second quarter of fiscal year 2025, all of which were primarily attributable to the Compute & Networking segment.
With several of these channel partners, we are selling multiple products and systems in our portfolio through their channels.
Our operating results depend on sales within our partner network, as well as the ability of these partners to sell products that incorporate our processors.
+Added: We have a small number of partners that are involved in system integration with our key customers.
+Added: As our system design becomes increasingly complex, system integrators may be unable to meet specifications of our key customers.
+Added: Changes in our partners' or customers' business models or their ownership can reduce the number of partners available to us and harm our ability to sell our advanced data center systems to customers.
In the future, these partners may decide to purchase fewer products, not to incorporate our products into their ecosystem, or to alter their purchasing patterns in some other way.
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Many of our customers often do not purchase directly from us but purchase through multiple OEMs, ODMs, system integrators, distributors and other channel partners.
−Removed: Two indirect customers each represented 10% or more of total revenue for the first quarter of fiscal year 2025;
−Removed: one of these indirect customers purchased our products primarily through direct Customer B.
−Removed: Both were attributable to the Compute & Networking segment.
+Added: For the second quarter of fiscal year 2025, two indirect customers which primarily purchase our products through system integrators and distributors, including through Customer B and Customer E, are estimated to each represent 10% or more of total revenue, attributable to the Compute & Networking segment.
If end demand increases or our finished goods supply availability is concentrated near a quarter end, the system integrators, distributors and channel partners may have limited ability to increase their credit, which could impact the timing and amount of our revenue.
−Removed: The loss of any of our large customers, a significant reduction in purchases by them, our inability to sell to a customer due to U.S.
+Added: The loss of any of our large customers, a significant reduction in purchases by them,
+Added: our inability to sell to a customer due to U.S.
or other countries’ trade restrictions or any difficulties in collecting accounts receivable would likely harm our financial condition and results of operations.
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For example, the French Competition Authority collected information from us regarding our business and competition in the graphics card and cloud service provider market as part of an ongoing inquiry into competition in those markets.
−Removed: We have also received requests for information from regulators in the European Union, the United Kingdom, and China regarding our sales of GPUs, our efforts to allocate supply, foundation models and our investments, partnerships and other agreements with companies developing foundation models, and we expect to receive additional requests for information in the future.
−Removed: Governments and regulators are considering imposing restrictions on the hardware, software, and systems used to develop frontier foundation models and generative AI.
−Removed: For example, the EU AI Act will likely become law this year.
+Added: We have also received requests for information from regulators in the European Union, the United States, the United Kingdom, China, and South Korea regarding our sales of GPUs, our efforts to allocate supply, foundation models and our investments, partnerships and other agreements with companies developing foundation models, and we expect to receive additional requests for information in the future.
+Added: Governments and regulators are considering, and in certain cases, have imposed restrictions on the hardware, software, and systems used to develop frontier foundation models and generative AI.
+Added: For example, the EU AI Act was formally adopted in June 2024 and will be implemented in phases between now and 2030.
+Added: The State of California, among other jurisdictions, is considering similar legislation.
Restrictions under this and any other regulations, if implemented, could increase the costs and burdens to us and our customers, delay or halt deployment of new systems using our products, and reduce the number of new entrants and customers, negatively impacting our business and financial results.
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The increasing focus on the risks and strategic importance of AI technologies has resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI and may in the future result in additional restrictions impacting some or all of our product and service offerings.
−Removed: Concerns regarding third-party use of AI for purposes contrary to local governmental interests, including concerns relating to the misuse of AI applications, models, and solutions, has resulted in and could in the future result in unilateral or multilateral restrictions on products that can be used for training, modifying, tuning, and deploying LLMs.
+Added: Concerns regarding third-party use of AI for purposes contrary to local governmental interests, including concerns relating to the misuse of AI applications, models, and solutions, has resulted in and could in the future result in unilateral or multilateral restrictions on products that can be used for training, modifying, tuning, and deploying LLMs and other AI applications.
Such restrictions have limited and could in the future limit the ability of downstream customers and users worldwide to acquire, deploy and use systems that include our products, software, and services, and negatively impact our business and financial results.
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and its allies.
−Removed: The United States has imposed unilateral controls restricting GPUs and associated
−Removed: products, and it is likely that additional unilateral or multilateral controls will be adopted.
+Added: The United States has imposed unilateral controls restricting GPUs and associated products, and it is likely that additional unilateral or multilateral controls will be adopted.
Such controls have been and may again be very broad in scope and application, prohibit us from exporting our products to any or all customers in one or more markets, including but not limited to China, and could negatively impact our manufacturing, testing and warehousing locations and options, or could impose other conditions that limit our ability to serve demand abroad and could negatively and materially impact our business, revenue and financial results.
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We have no assurance that the USG will grant such a license or that the USG will act on the license application in a timely manner or at all.
−Removed: Even if a license is offered, it may impose burdensome conditions that we or our customer or end users cannot or decide not to accept.
−Removed: The USG is evaluating license requests in a closed process that does not have clear standards or an opportunity for review.
+Added: Even if a license is approved, it may impose burdensome conditions that we or our customer or end users cannot or decide not to accept.
+Added: The USG is evaluating license requests in a closed process that
+Added: does not have clear standards or an opportunity for review.
For example, the Notified Advanced Computing, or “NAC,” process has not resulted in approvals for exports of products to customers in China.
−Removed: The license process for exports to D1 and D4 countries has been time-consuming and resulted in license conditions for countries outside China.
−Removed: The requirements have a disproportionate impact on NVIDIA and already have disadvantaged and may in the future
−Removed: disadvantage NVIDIA against certain of our competitors who sell products that are not subject to the new restrictions or may be able to acquire licenses for their products.
+Added: The license process for exports to D1 and D4 countries has been time-consuming and resulted in license conditions that are onerous, even for small-sized systems that are not able to train frontier AI models.
+Added: The requirements have a disproportionate impact on NVIDIA and already have disadvantaged and may in the future disadvantage NVIDIA against certain of our competitors who sell products that are not subject to the new restrictions or may be able to acquire licenses for their products.
Management of these new licenses and other requirements is complicated and time consuming.
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In the event of such change, we may be unable to sell our inventory of such products and may be unable to develop replacement products not subject to the licensing requirements, effectively excluding us from all or part of the China market, as well as other impacted markets, including the Middle East.
−Removed: For example, the USG has already imposed conditions to limit the ability of foreign firms to create and offer as a service large-scale GPU clusters, for example by imposing license conditions on the use of products to be exported to certain countries, or by requiring chip tracking and throttling mechanisms that would disable or impair GPUs if certain system or use conditions are detected.
+Added: For example, the USG has already imposed conditions to limit the ability of foreign firms to create and offer as a service large-scale GPU clusters, for example by imposing license conditions on the use of products to be exported to certain countries, and may impose additional conditions such as requiring chip tracking and throttling mechanisms that could disable or impair GPUs if certain events, including unauthorized system configuration, use, or location, are detected.
The USG has already imposed export controls restricting certain gaming GPUs, and if the USG expands such controls to restrict additional gaming products, it may disrupt a significant portion of our supply and distribution chain and negatively impact sales of such products to markets outside China, including the U.S.
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Additionally, restrictions imposed by the Chinese government on the duration of gaming activities and access to games may adversely affect our Gaming revenue, and increased oversight of digital platform companies may adversely affect our Data Center revenue.
−Removed: The Chinese government may impose restrictions on the sale to certain customers of our products, or any products containing components made by our partners and suppliers.
+Added: The Chinese government may also impose restrictions on the sale to certain customers of our products, or any products containing components made by our partners and suppliers.
For example, the Chinese government announced restrictions relating to certain sales of products containing certain products made by Micron, a supplier of ours.
+Added: As another example, an agency of the Chinese government announced an Action Plan that endorses new standards regarding the compute performance per watt and per memory bandwidth of accelerators used in new and renovated data centers in China.
+Added: If the Chinese government modifies or implements the Action Plan in a way that effectively prevents us from being able to design products to meet the new standard, this may restrict the ability of customers to use some of our data center products and may have a material and adverse impact on our business, operating results and financial condition.
Further restrictions on our products or the products of our suppliers could negatively impact our business and financial results.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.