Nvidia Corp. on Wednesday forecast quarterly revenue above analysts’ estimates and announced a stock split, propelling its shares to record highs and capturing the attention of investors who have significantly boosted the chipmaker’s market value over the past year, driven by enthusiasm for artificial intelligence (AI).
Nvidia shares surged 5.9% in after-hours trading, reaching $1,005, crossing the significant $1,000 threshold and adding approximately $140 billion in market value. The company’s stock has already increased by 90% this year, and if it closes at Wednesday’s after-hours price in the next trading session, it will mark a new record high.
Key Financial Metrics:
| Metric | Q1 2024 | Q1 2023 | YoY Change | Analysts’ Estimates |
|---|---|---|---|---|
| Revenue | $26.04 billion | $7.19 billion | +262% | $24.65 billion |
| Net Income | $14.88 billion | $2.04 billion | +628% | N/A |
| Adjusted EPS | $6.12 | $0.91 | +572% | $5.59 |
| Data Center Revenue | $22.6 billion | $4.29 billion | +427% | $21.32 billion |
| Forecasted Q2 Revenue | $28 billion (±2%) | N/A | N/A | $26.66 billion |
| Adjusted Gross Margin (Q1) | 78.9% | 67.8% | +16.4% | 77% |
| Forecasted Q2 Gross Margin | 75.5% (±50 basis points) | N/A | N/A | 75.8% |
Nvidia announced a ten-for-one stock split effective on June 7, intending to make its shares more accessible to retail investors. Alongside this, the company is raising its quarterly dividend by 150% to 1 cent per share on a post-split basis.
“Death, taxes, and NVDA beats on earnings. Even in the face of huge expectations, the company once again stepped up and delivered,” said Ryan Detrick, chief market strategist at Carson Group. “The always important data center revenue was strong, while future revenue was also impressive.”
Nvidia’s strong earnings report is seen as a significant event on Wall Street, likely to add momentum to the stock market rally that has pushed indexes to record highs this year. Following Nvidia’s results, shares of rival AI-related chipmakers, including Advanced Micro Devices and Broadcom, each rose about 2%.
Market Highlights:
- Nvidia’s Stock Performance: Shares jumped 5.9%, reaching $1,005 in after-hours trading.
- Stock Split: Ten-for-one split effective June 7.
- Dividend Increase: Quarterly dividend increased by 150% to 1 cent per share (post-split).
- Rival Performance: AMD and Broadcom shares rose by approximately 2% following Nvidia’s report.
Alphabet, Microsoft, Amazon.com, and other technology companies are competing for a limited supply of Nvidia’s high-end chips as they race to dominate AI computing. During a conference call with analysts, CEO Jensen Huang announced that Nvidia’s upcoming Blackwell AI chips will ship in the current fiscal quarter, with production ramping up in the following quarter.
Chief Financial Officer Colette Kress noted that demand for Blackwell chips could exceed supply “well into next year.” Nvidia’s contract chipmaker, Taiwan Semiconductor Manufacturing, is also working to increase its advanced packaging capacity, a key supply-chain constraint for the processors. The company expects to more than double this capacity within the year.
Nvidia forecast fiscal second-quarter revenue of $28 billion, plus or minus 2%, significantly above analysts’ expectations of $26.66 billion. For the first quarter, Nvidia reported a 262% year-over-year revenue surge to $26.04 billion, beating estimates of $24.65 billion, and a 628% increase in net income to $14.88 billion.
“Demand for Nvidia’s GPU chips remains white-hot,” said Logan Purk, an analyst at Edward Jones. “These results are likely enough to satiate investors’ appetites and reassure the market that AI investment has not seen a slowdown yet.”
Nvidia, which controls over 80% of the market for AI chips, stands out as both the largest enabler and beneficiary of surging AI development. Sales at the data center segment, Nvidia’s largest revenue source, grew 427% to $22.6 billion in the first quarter, surpassing estimates of $21.32 billion according to FactSet data.
Among Nvidia’s customers is Meta Platforms, which recently increased its 2024 capital expenditure forecast by about $4 billion. The high performance of Nvidia’s chips, coupled with its proprietary CUDA software framework, makes them indispensable in current AI data centers.
While most hyperscalers are developing their own custom AI chips, analysts do not expect these efforts to significantly diminish Nvidia’s market share. Nvidia anticipates a second-quarter adjusted gross margin of 75.5%, plus or minus 50 basis points, with analysts forecasting a slightly higher margin of 75.8%.
For the first quarter, Nvidia reported an adjusted gross margin of 78.9%, compared to estimates of 77%. In comparison, aspiring competitor AMD recorded an adjusted margin of 52% in its fiscal first quarter.
Excluding items, Nvidia earned $6.12 per share in the first quarter, surpassing the estimates of $5.59.
- Nvidia’s Revenue Forecast: Fiscal second-quarter revenue forecasted at $28 billion, above analyst estimates.
- Quarterly Financial Performance: First-quarter revenue and net income surged by 262% and 628% respectively, beating expectations.
- Market Share and Competition: Nvidia remains the dominant player in the AI chip market, with significant future demand expected for its upcoming Blackwell AI chips.
- Stock Market Influence: Nvidia’s earnings report is a key driver in the ongoing stock market rally, with significant gains for its stock and positive impacts on rival chipmakers’ shares.
Nvidia’s impressive financial performance, strategic stock split, and continued dominance in the AI chip market position it as a key player in the tech industry, with strong investor confidence and robust future growth prospects.
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