Nvidia stock jumps 9%, tops $1,000 after earnings beat forecasts, announces stock split, dividend increase

Nvidia (NVDA) stock rose 9.3% on Thursday, closing above $1,000 for the first time and giving the chip giant a market cap north of $2.5 trillion after reporting earnings of the first quarter which once again exceeded forecasts.

Nvidia’s first-quarter results, released after the bell on Wednesday, showed adjusted earnings per share (EPS) of $6.12 on revenue of $26 billion, a jump of 461% and 262%. , respectively, compared to last year.

The company also announced a 10-for-1 stock split and dividend increase, following the lead of some of its big tech peers that were doling out higher quarterly payouts to shareholders.

Analysts expected adjusted EPS of $5.65 on revenue of $24.69 billion, according to Bloomberg data. The company reported adjusted EPS of $1.09 on revenue of $7.19 billion in the same quarter last year.

For the current quarter, Nvidia forecasts revenue of $28 billion, plus or minus 2%. This is better than the $26.6 billion expected by analysts.

“Our data center growth has been fueled by strong and growing demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang said in a statement. “Beyond cloud service providers, generative AI has expanded to consumer internet companies and enterprises, sovereign AI, automotive and healthcare customers, creating multiple verticals of several billion dollars.

Wall Street analysts have already expressed concerns about how much of Nvidia’s data center revenue comes from hyperscalers like Microsoft (MSFT), Google (GOOG, GOOGL), Amazon (AMZN) and other big names in technology. This is especially true as these companies deploy their own AI accelerator chips.

In an exclusive interview with Yahoo Finance following the company’s earnings report on Wednesday, Huang pushed back on concerns that the company could face a lull in demand as it transitions from its current generation to the next generation of AI chips.

“People want to deploy these data centers right now,” Huang said. “They want to get our (graphics processing units) running right now and start making money and saving money. And so this demand is so strong.”

Nvidia’s data center revenue jumped 427% year over year to $22.6 billion, accounting for 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its largest business, reported revenue of $2.6 billion. Chief Financial Officer Colette Kress said in a statement Wednesday that large cloud providers account for about 45% of the company’s data center revenue.

In a note to clients released Thursday, JPMorgan analysts led by Harlan Sur wrote that Nvidia “continues to maintain a one- to two-length lead over its competitors.” JPMorgan raised its price target on Nvidia stock from $850 to $1,150 and reiterated an overweight rating on the stock.

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During the company’s earnings call, Kress highlighted that revenue from China declined significantly during the quarter as the company was forced to halt shipments of its most powerful chips to the country. The company also expects the region’s market to remain very competitive in the future.

The company’s stock split – under which shareholders will receive 10 shares for every share of the company they currently own – will take effect on June 7 and its new dividend will be paid on June 28 to shareholders starting from June 11.

The stock split will likely fuel speculation that Nvidia could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining Big Tech peers like Apple (AAPL), Amazon and Microsoft.

Nvidia’s dividend increase also follows similar moves announced this year by Meta (META) and Alphabet, which both launched quarterly dividends for the first time, and Apple, which increased its dividend earlier this month -this.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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