First-quarter earnings reported by Nvidia Sales exceeded Wall Street estimates. This, in turn, resulted in a stock surge of over 25% during extended trading.
The company announced its plans to ramp up chip supply in response to the growing demand for its products, particularly in the field of artificial intelligence (AI) powering services like ChatGPT.
Nvidia, renowned for its high-performance graphics cards and software, finds itself at the forefront of the AI boom. While Nvidia’s stock has more than doubled this year, its competitor Advanced Micro Devices (AMD) has seen a 69% increase during the same period.
Revenue insights from Nvidia Sales surge high
Revenue for the first quarter reached $7.19 billion, surpassing the expected $6.5 billion. Although, it reflected a 13% decline compared to the previous year’s $8.3 billion.
Net income stood at $2.7 billion, surpassing expectations of $2.2 billion, albeit slightly lower than the $2.8 billion reported in the first quarter of the previous year.
Adjusted earnings per share of $1.09 outperformed the consensus of 92 cents. The decline in revenue can be attributed to the decreased demand for chips used in cryptocurrency mining after Ethereum’s blockchain transitioned to proof of stake architecture.
For the second quarter, Nvidia anticipates sales of approximately $11 billion, with a margin of plus or minus 2%, driven by increased demand for its data centre product portfolio. This includes H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU.
Record-Breaking Revenue: Data Centre Segment’s First-Quarter Success
The surge in demand for these products is a direct result of the booming AI industry. Nvidia’s CEO, Jensen Huang, highlighted the “surging demand” for these offerings and emphasised that the company is significantly ramping up its supply to meet the market needs.
The data centre segment experienced a record-breaking first-quarter revenue of $4.28 billion, a 14% increase from the previous year.
On the other hand, the professional visualisation segment, which includes services like Omniverse Cloud running on Microsoft Azure for the development and deployment of industrial metaverse applications, reported $295 million in sales, a 53% decline from the previous year.
Nvidia’s Advantage in AI: Insights from Matt Bryson, Senior Vice President of Equity Research
Matt Bryson, Senior Vice President of Equity Research at Wedbush, noted that Nvidia Sales has established a significant advantage in the field of AI. However, he expressed less clarity regarding the metaverse opportunity and stated that while the concept of Omniverse is intriguing, its current contribution remains modest compared to AI, specifically generative AI.
Analyst John Vinh from KeyBank reaffirmed a good rating for Nvidia’s stock and increased the price target to $375 from $320. Following the announcement, Nvidia’s stock closed the regular trading session at $305.38 and surged to $386.50 in after-hours trading.