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Nvidia shares rise more than 9% following latest revenue surge

Published 05/22/2024, 04:32 PM
Updated 05/23/2024, 11:12 AM
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Investing.com -- Shares in Nvidia (NASDAQ:NVDA) gained more than 9% in Thursday trading after the semiconductor group's much-anticipated first-quarter results soared and its chief executive touted skyrocketing demand for its upcoming artificial intelligence-optimized chip.

It was the latest blockbuster return for California-based Nvidia, whose data center graphics processing units have become essential parts of the architecture undergirding the development of generative AI products. 

Nvidia's performance has subsequently become an indicator of the course of AI demand and, by extension, a major influence on broader market sentiment. U.S. stock futures were higher following the report. 

"The next industrial revolution has begun," CEO Jensen Huang said in a statement. "AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient, while expanding revenue opportunities."

Huang later told investors in a post-earnings call that the company will be boosted by "a lot" of revenue this year from its Blackwell line of chips, in a sign that it sees no near-term let-up in the AI boom. He added that other chips are due to be rolled out after Blackwell, as part of a "one-year rhythm" of fresh launches.

Revenue in the three months to April 28 soared by 262% from a year ago to $26 billion, beating Wall Street estimates of $24.7 billion, even as Nvidia faces increasing competition from rivals like AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC). Data center revenue, which roughly translates to Nvidia's AI chips, spiked by 427% year-on-year to a record $22.6 billion. 

Adjusted earnings per share, meanwhile, came in at $6.12, up from $1.09 a share a year earlier and above analyst estimates of $5.58 a share.

In the current quarter, Nvidia expects the group-wide top-line figure to continue growing to $28 billion, plus or minus 2%. Analysts had pencilled in a quarterly forecast of $26.8 billion. Adjusted gross margin is expected to come in at 75.5% for the second quarter.

Goldman Sachs analysts said both metrics "met elevated investor expectations."

Nvidia also announced a ten-for-one forward stock split starting June 7, saying it is looking to make its stock ownership "more accessible to employees and investors." Over the past one-year period, Nvidia's share price has raced up by 209%.

The company hiked its quarterly cash dividend by 150% to $0.10 per share as well.

The prospect of sustained AI demand bolstered Nvidia's Asian suppliers, including memory chip manufacturers SK Hynix and Samsung Electronics (KS:005930), as well as contract semiconductor firm TSMC. Chipmakers in Europe like Infineon (OTC:IFNNY) (ETR:IFXGn), ASM (AS:ASMI) and ASML (AS:AS:ASML) also gained, while the pan-European tech index was among the best performing sectors in the region.

Analysts at Stifel said Nvidia delivered a "strong start" to its 2025 trading year, noting that they view it as "the best-positioned supplier into AI computing and networks regardless of the workload."

Senad Karaahmetovic and Yasin Ebrahim contributed to this report.

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