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What Exciting Revelations Did Nvidia's Latest Earnings Report Unveil for Investors?
Nvidia's earnings report surpassed expectations, with revenue increasing by 262% from the previous year, pushing its share price to a record high of $1,020 after market close. The surge was driven by strong AI demand. Additionally, Nvidia announced a 10-to-1 stock split to make shares more accessible to retail investors, which could further boost share prices.
The next industrial revolution has begun. Companies and countries are partnering with Nvidia to shift the trillion-dollar installed base of data centers to accelerate computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence," Nvidia CEO Jensen Huang said on an earnings call Wednesday.
Nvidia's Staggering Growth Figures
Nvidia's fiscal first-quarter revenue of $26 billion beat the consensus view of $24.6 billion and also met bullish investor expectations that analysts said were around the $26 billion range. The company reported remarkable growth, with overall revenue increasing by 262% from the previous year. Data-center revenue surged by 427%, and adjusted earnings per share rose by 461%. Nvidia sees Q2 FY2025 revenue of $28.00B versus the analyst consensus of $26.66B.
Data Center Business
The company's most significant and crucial segment is its data center sales, encompassing AI chips and various components required for large AI servers. Nvidia reported a 427% increase in its data center category compared to the same quarter last year, reaching $22.56 billion in revenue. According to Nvidia's finance chief Colette Kress, this growth was driven by shipments of the company's Hopper graphics processors, which include the H100 GPU.
A big highlight this quarter was $Meta Platforms (META.US)$'s announcement of Lama 3, their latest large language model which used 24,000 H100 GPUs," CFO Kress said on a call with analysts. She added that large cloud providers make up about "mid-40%" of Nvidia's data center revenue.
Even as the company reports a tripling or more of its business, Huang said that the company's next-generation AI GPU, called Blackwell, would lead to more growth.
Demand for H200 and Blackwell is well ahead of supply and we expect demand may exceed supply well into next year," Kress said on the earnings call.
Huang clarified that the new system is set for production shipments starting in the second quarter and will ramp in the third quarter. He indicated customers should have Blackwell stood up in their data centers in the final quarter of fiscal 2025. When asked if investors should expect Blackwell to impact revenue, Huang said, "we will see a lot of Blackwell revenue this year."
Stock Split & Cash Dividend
Nvidia announced a 10-for-1 stock split alongside its earnings beat, providing shareholders with ten shares for each one they held before the split. This move aims to make the stock more accessible to employees and investors. Shareholders of record by market close on Thursday, June 6, will receive nine additional shares, distributed after market close on Friday, June 7. The stock will begin trading on a split-adjusted basis on Monday, June 10.
Additionally, Nvidia will increase its quarterly cash dividend from 4 cents to 10 cents per share.
What Management & Analysts Said
• During an earnings call on Wednesday, Nvidia's CFO Colette Kress highlighted a rapidly growing area: sovereign AI. Following the chip maker's record-breaking performance that exceeded Wall Street estimates, Kress explained that many nations are enhancing their domestic computing capacity. Some are developing sovereign-AI clouds in partnership with state-owned telecom providers or utilities, while others are sponsoring local cloud partners to create shared AI computing platforms for both public and private sectors.
From nothing the previous year, we believe sovereign-AI revenue can approach the high, single-digit billions this year," Kress said. "The importance of AI has caught the attention of every nation."
• Nvidia CEO Jensen Huang discussed the company's long-term innovation plans, revealing that a new chip will follow the Blackwell model, adhering to a "one-year rhythm." He also assured investors of rapid advancements in networking technology. Huang emphasized Nvidia's commitment to Ethernet and highlighted its strong partnerships, particularly with Dell Technologies, which is expanding its AI factory with Nvidia's Spectrum-X Ethernet networking fabric.
• Tech investor and The Citadel finance professor Paul Meeks noted that Nvidia's 10-to-1 stock split won't immediately affect its valuation but will make shares more affordable and accessible for retail investors. Currently trading around $950, Nvidia's stock is expected to be available for under $100 per share after the split on June 7.
Stock splits are cosmetic … But as you drive the stock down to about $100 a share, and everyone on planet Earth knows that this is the leading tech stock … I do think that there are probably some retail investors that are champing at the bit to buy it now," Meeks said. "It’s definitely overall a positive."
• Since the beginning of the year, competition for Nvidia has increased. $Intel (INTC.US)$, with $8.5 billion in CHIPS Act funding, launched its Gaudi 3 AI chip to compete with Nvidia's Blackwell model. Meanwhile, $Alphabet-A (GOOGL.US)$ and $Microsoft (MSFT.US)$ are developing their own AI chips to reduce reliance on Nvidia and cut costs.
This combination of some of the big companies saying, 'We're going to develop our own AI chips,' and other industries saying, 'We're going to do it locally on our smaller devices, for less power consumption' — that might, in the long term, be what hinders their growth," said Edward Wilford, an analyst at tech consultancy Omdia.
Source: CNBC, Investopedia, Investing.com, FORTUNE, MarketWatch
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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SaulHernandez : Excuse me for so much notification and I just don't see it as my money
SaulHernandez : $NVIDIA (NVDA.US)$