By Arsheeya Bajwa and Stephen Nellis
(Reuters) – Nvidia on Wednesday forecast quarterly revenue that beat estimates and announced a stock split, taking its shares to record highs and impressing investors who have tripled the chipmaker’s market value over the past year. the past year thanks to its optimism in AI.
Nvidia shares jumped 5.9% to $1,005 in extended trading, peaking above the psychologically important $1,000 mark for the first time. Stock of children’s AI posters is up more than 90% so far this year.
The Santa Clara, Calif.-based company said the ten-for-one stock split would take effect June 7. It also announced that it would increase its quarterly dividend by 150%, to 1 cent per share, after the split.
“Death, Taxes and NVDA Beat Earnings. Even in the face of huge expectations, the company once again stepped up and delivered on its promises,” said Ryan Detrick, chief market strategist at Carson Group. “Continued strong data center revenues have been strong, while future revenues have also been impressive.”
Wall Street’s main event so far this week, Nvidia’s earnings report could add new fuel to a stock market rally that has propelled indexes to record highs this year.
Following Nvidia’s results, shares of rival AI-related chipmakers Advanced Micro Devices and Broadcom each rose about 2%.
Alphabet, Microsoft, Amazon.com and other technology companies are competing for a limited supply of high-end chips from Nvidia as they try to dominate AI computing.
In a conference call with analysts, CEO Jensen Huang said Nvidia’s next Blackwell AI chips would ship in the current fiscal quarter, with production increasing in the following quarter.
Chief Financial Officer Colette Kress said demand for Blackwell chips could outstrip supply “until next year.”
Nvidia’s contract chipmaker, Taiwan Semiconductor Manufacturing, has also been working to increase its advanced packaging capacity, a key supply chain constraint for processors. The Taiwanese company said in April it planned to more than double its advanced packaging capacity this year.
Nvidia expects second-quarter revenue of $28 billion, plus or minus 2%. Analysts on average expected revenue of $26.66 billion, according to LSEG data.
First-quarter revenue jumped 262% year over year to $26.04 billion, beating estimates of $24.65 billion. Net profit soared 628% to $14.88 billion.
“Demand for NVIDIA’s GPU chips remains red hot,” said Logan Purk, an analyst at Edward Jones. “These results are likely to satisfy investor appetite and reassure the market that investment in AI has not yet seen a slowdown.”
Dominating more than 80% of the AI chip market, Nvidia is uniquely positioned as the primary enabler and beneficiary of the growing development of AI.
Sales in the data center segment, the largest by revenue, rose 427% to $22.6 billion in the first quarter ended April 28, beating estimates of $21.320 billion, according to FactSet data.
Among Nvidia’s customers is Meta Platforms, which last month raised the midpoint of its 2024 capital spending forecast by about $4 billion.
The high performance of Nvidia chips makes them difficult to replace in today’s AI data centers. Added to this advance is its proprietary CUDA software framework that developers use to program AI processors.
Even though most hyperscalers are also developing their own custom AI chips, analysts don’t expect those to eat into Nvidia’s market share.
Nvidia expects second-quarter adjusted gross margin to be 75.5%, plus or minus 50 basis points. Analysts on average forecast a gross margin of 75.8%.
Nvidia reported an adjusted gross margin of 78.9% in the first quarter, compared to an estimate of 77%. Budding competitor AMD had an adjusted margin of 52% in its fiscal first quarter.
Excluding items, the company earned $6.12 per share in the first quarter, beating estimates of $5.59.
(Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis in San Francisco; additional reporting by Noel Randewich in Oakland, California; editing by Arun Koyyur and Matthew Lewis)
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