Nvidia shares rose nearly 5% in post-market trading on May 22 after CEO Jensen Huang delivered another “win and rise” quarter. The semiconductor chipmaker surprised investors by beating Wall Street's increasingly optimistic forecasts, and its fiscal first-quarter results did not disappoint.
The company has found itself at ground zero in the quest to accelerate artificial intelligence. Its graphics processing units, particularly the H100 and next-generation Blackwell line, are better suited to handling the heavy workloads of training and operating ai applications.
As a result, enterprise network and cloud operators are spending a lot of money on Nvidia chips, which run faster and use less power.
Another blockbuster earnings report from Nvidia
There has been concern that Nvidia's sales growth could slow as buyers hold back on previous-generation chips ahead of the widespread availability of Blackwell chips.
Related: Nvidia Stock Hinges on 5 Key Things in Its Earnings Report
However, Nvidia had an impressive quarter. Revenue was again driven by data center sales. The network upgrades generated data center revenue of $22.6 billion, a whopping 427% more than a year ago and 23% more than the previous quarter. Analysts predicted data center revenue of $21.1 billion.
“We are prepared for our next wave of growth. “The Blackwell platform is in full production and forms the basis for generative ai at the trillion-parameter scale,” Huang said.
Elsewhere, it was a solid quarter as well. Gaming revenue increased markedly, increasing 18% year over year to $2.6 billion. Auto sales were $329 million, up 11%, and professional display sales were $427 million, up 45% from last year.
Overall, Nvidia's first-quarter revenue was $26 billion, beating Wall Street analysts' target of $24.6 billion and up 262% from a year ago.
Investors were also concerned about spending to stay ahead of rivals such as Advanced Micro Devices. AMD launched its own chips specially designed for ai earlier this year.
Even though Nvidia invested heavily to maintain its 80% market share in ai chips, profitability remained strong.
Adjusted earnings were $6.12 per share in the first quarter, above analysts' expectations of $5.58, and up 461% from last year.
Nvidia's guide does not disappoint
It's difficult for companies to continue raising expectations when optimism is already through the roof. However, Nvidia was able to improve its prospects despite the high level.
Related: Analysts Reset Qualcomm Stock Price Target on Microsoft Deal
For Nvidia's fiscal second quarter, Huang forecasts revenue of $28 billion, more than $1 billion more than analysts anticipated. A year ago, the company's July quarter sales were $13.5 billion.
It didn't issue specific earnings-per-share guidance, but it does expect gross margin to be a healthy 75.5%, plus or minus half a percent. For perspective, gross margin for the fiscal first quarter was 78.9%, up from 66.8% in the same period last year.
Nvidia offers surprising news
The numbers certainly suggest that demand for ai infrastructure is not slowing down. However, investors are not only applauding the final results.
More ai actions:
- World's largest hedge fund increases stake in Nvidia stock
- Analysts Update Dell Stock Price Targets Following Tesla Server Win
- Microsoft takes a blow to Nvidia
Huang also announced that Nvidia shares will be split 10:1 to “make stock ownership more accessible to employees and investors.” On June 7, each shareholder at the close of June 6 will receive nine additional shares for each share held.
Huang did not stop there.
Nvidia also announced that it will increase its dividend payout by 150% to ten cents per share from the previous four cents. After the split, the dividend will be one cent.
Related: Best Single Trade: Wall Street Veteran Picks Palantir Stock
