Nvidia (NASDAQ:NVDA) shares surged by as much as 9% on Thursday, surpassing $1,000 in early trading, and pushing the chip giant’s market capitalization above $2.5 trillion following its impressive first-quarter earnings report.
Nvidia’s first quarter results, released after the market closed on Wednesday, revealed adjusted earnings per share (EPS) of $6.12 on revenue of $26 billion. This represents an astounding increase of 461% and 262%, respectively, from the same period last year.
In addition to the robust earnings, Nvidia announced a 10-for-1 stock split and an increased dividend, joining other Big Tech companies in providing larger quarterly payouts to shareholders.
Analysts had anticipated adjusted EPS of $5.65 on revenue of $24.69 billion, according to Bloomberg. In the same quarter last year, Nvidia reported adjusted EPS of $1.09 on revenue of $7.19 billion.
For the upcoming quarter, Nvidia forecasts revenue of $28 billion, plus or minus 2%, exceeding analysts’ expectations of $26.6 billion.
Data Center Growth Driven by AI
“Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang stated. “Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive, and healthcare customers, creating multiple multibillion-dollar vertical markets.”
Wall Street analysts have expressed concerns about the proportion of Nvidia’s Data Center revenue derived from hyperscalers like Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), and other major tech companies, particularly as these firms develop their own AI accelerator chips.
In an exclusive interview with Yahoo Finance following the earnings release, Huang addressed these concerns, emphasizing that demand for Nvidia’s products remains robust.
“People want to deploy these data centers right now,” Huang said. “They want to put our [graphics processing units] to work immediately to start generating and saving money. So, the demand is extremely strong.”
Nvidia’s Data Center revenue surged 427% year-over-year to $22.6 billion, making up 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, previously its primary business, reported revenue of $2.6 billion. CFO Colette Kress highlighted that large cloud providers accounted for around 45% of the Data Center revenue.
Market Reactions and Future Expectations
During the earnings call, Kress pointed out a significant drop in revenue from China, as Nvidia halted shipments of its most advanced chips to the country. The company anticipates continued competitive challenges in this region.
The stock split, where shareholders will receive 10 shares for each share they currently hold, will take effect on June 7, with the new dividend paid on June 28 to shareholders of record as of June 11.
This split could lead to speculation that Nvidia might be added to the price-weighted Dow Jones Industrial Average, joining other tech giants like Apple (NASDAQ:AAPL), Amazon, and Microsoft. Nvidia shares were trading around $980 in after-hours trading on Wednesday, suggesting the stock would trade at approximately $98 post-split.
Nvidia’s increased dividend aligns with similar actions taken by companies like Meta (NASDAQ:META) and Alphabet (NASDAQ:GOOGL), which initiated their first quarterly dividends earlier this year, and Apple, which recently raised its dividend.
Featured Image – By NVIDIA Taiwan – https://www.flickr.com/photos/nvidia-taiwan/19548286388, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=59135138
