In the most recent quarter, Nvidia exceeded analyst expectations with revenue surging 262% year-over-year to $26.04 billion and adjusted earnings-per-share increasing 461% to $6.12. The company also announced a 10-for-1 stock split, making stock ownership more accessible. Nvidia’s high-performance GPUs are driving the AI revolution and the company is expanding into software with its Nvidia AI Enterprise service. Despite concerns about a product transition slowdown, demand is expected to exceed supply for a while due to ongoing build-outs in the tech industry.
Nvidia’s CEO Jensen Huang highlighted the company’s role in redesigning how computers work and explained how the shift towards accelerated computing is reshaping the industry. The company’s platform system offers the highest performance at the lowest total cost of ownership, giving it a competitive advantage in the market. Nvidia’s leadership in the AI industrial revolution is a key reason for long-term investors to hold onto their shares. Although there are concerns about custom chips from big cloud companies posing a threat to Nvidia’s dominance, Jensen believes that Nvidia’s value proposition remains unbeatable.
Nvidia’s strong results and optimistic outlook led to a 6% increase in its stock price, reaching above $1,000 per share for the first time. Quarterly growth was driven by enterprise and consumer internet companies, with large cloud companies representing a significant portion of data center revenue. Nvidia’s CFO estimates that for every $1 spent on Nvidia AI Infrastructure, a cloud provider has an opportunity to earn $5 in GPU instant hosting revenue over four years. Key customer callouts included Tesla’s expansion of its AI cluster to 35,000 GPUs and Meta’s training of a large language model using Nvidia’s infrastructure.
Looking ahead, Nvidia expects supply for its H100 GPUs to improve but is still constrained on the H200. Demand for the newer Blackwell chip is expected to remain strong, with revenue from Blackwell shipments starting in the second quarter and ramping up throughout the year. Software and services are becoming an increasingly important part of Nvidia’s business, with an annualized revenue rate of $1 billion. The company is also developing products specifically for the Chinese market without export restrictions, as the China revenue stream is expected to be less significant in the future due to competitive limitations.
For the fiscal second quarter, Nvidia projected revenue of $28 billion and adjusted gross margins of 75.5%, dismissing concerns of an AI spending “air pocket.” The company also increased its quarterly dividend by 150% and repurchased $7.7 billion of stock in fiscal Q1. Overall, Nvidia’s strong performance, innovative products, and strategic focus on accelerating computing make it a compelling investment opportunity with continued growth potential.
