On Wednesday, Nvidia forecasted quarterly revenue to exceed expectations and announced a stock split, driving its shares to a record high and attracting investor attention. Over the past year, investor optimism about artificial intelligence has tripled the market value of this chipmaker.
In extended trading hours, Nvidia's stock price surged 5.9% to $1,005, breaking the psychologically significant $1,000 mark and adding about $140 billion to its market value.
As a leader in the field of artificial intelligence, Nvidia's stock has risen 90% this year. If Thursday's Wall Street trading session maintains Wednesday's after-hours price, it will set a new historical high.
The Santa Clara, California-based company announced a 10-for-1 stock split on June 7 and a 150% increase in quarterly dividends, adjusted to 1 cent per share.
Carson Group's chief market strategist Ryan Detrick said, "Death, taxes, and Nvidia beating earnings expectations are the three certainties. Even with high expectations, the company has once again exceeded them. The strong performance of data center revenue and impressive future revenue forecasts are noteworthy."
One of the main events on Wall Street this week is Nvidia's earnings report, which could further fuel the stock market rally that has already reached historic highs this year.
Following Nvidia's performance release, competitors AMD (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO) each saw their stock prices rise by about 2%.
Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and other tech companies are vying for Nvidia's limited supply of high-end chips to dominate the AI computing field.
In a conference call with analysts, CEO Jensen Huang said Nvidia's upcoming Blackwell AI chips will ship in the current quarter and ramp up production in the next quarter.
CFO Colette Kress stated that demand for Blackwell chips might exceed supply until next year.
Nvidia's contract chip manufacturer TSMC is also working to increase its advanced packaging capacity, a critical supply chain bottleneck. TSMC said in April that it expects to more than double its advanced packaging capacity this year.
Nvidia predicts second-quarter revenue of $28 billion, plus or minus 2%. According to LSEG data, analysts expect average revenue to be $26.66 billion.
First-quarter revenue surged 262% year-over-year to $26.04 billion, exceeding the expected $24.65 billion. Net income soared 628% to $14.88 billion.
Edward Jones analyst Logan Purk stated, "Demand for Nvidia GPU chips remains red hot. These results are enough to satisfy investor appetite and assure the market that AI investment has not slowed down."
Nvidia holds over 80% of the AI chip market share, making it the largest driver and beneficiary of AI development.
In the first quarter ending April 28, the data center segment's sales grew 427% to $22.6 billion, surpassing FactSet's expectation of $21.32 billion.
One of Nvidia's clients, Meta Platforms (NASDAQ:META), last month raised the midpoint of its 2024 capital expenditure forecast by about $4 billion.
The high performance of Nvidia chips makes them indispensable in existing AI data centers. Its proprietary CUDA software framework further solidifies this leading position, with developers using it to program AI processors.
Although most so-called hyperscale computing companies are also developing their own custom AI chips, analysts believe these chips will not erode Nvidia's market share.
Nvidia expects an adjusted gross margin of 75.5%, plus or minus 50 basis points, for the second quarter. Analysts' average expectation for gross margin is 75.8%.
Nvidia reported an adjusted gross margin of 78.9% for the first quarter, versus the expected 77%. Its competitor AMD reported an adjusted gross margin of 52% in the first fiscal quarter.
Excluding certain items, the company's adjusted earnings per share for the first quarter were $6.12, surpassing expectations of $5.59.
