Nvidia Does It Again, Smashes Targets And Raises Outlook
The AI chip maker announced the highest level in its history after delivering impressive results for the first quarter of fiscal year and solid Q2 guidance.
By Investor’s Business Daily
Artificial intelligence technology leader Nvidia ( NVDA ) late Wednesday beat Wall Street’s targets for its fiscal first quarter and guided higher than views for the current period. It also announced a 10-for-1 stock split. Nvidia stock rose in extended trading.
Its Santa Clara, Calif.-based chipmaker made an adjusted $6.12 per share from sales of $26 billion during the last quarter that ended April 28. Analysts surveyed by FactSet were expecting earnings of $5.60 per share, based on revenues in the range of $24.59 billion. If you compare year-to-year, Nvidia earnings rocketed 461 percentage points, and sales soared 262% more.
The fiscal Q1 financial results of Nvidia was the fourth consecutive quarter of growth that was triple-digit in both earnings and sales.
For the current quarter Nvidia expects to make sales of $28 billion in contrast to. an estimate that is consensus for $26.62 billion. In the first quarter of the year, Nvidia posted sales of $13.51 billion.
Nvidia Stock Jumps After Report
After-hours trading on the markets this morning, Nvidia stock jumped 5.9 percent to 1,005.89 this would be a the record-setting high. In the normal session on Wednesday, Nvidia stock dipped 0.5 percent to close at 949.50 and was trading in the an investment range of.
“The next industrial revolution has begun — companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence,” Chief Executive Jensen Huang said in a announcement.
He said, “AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient, while expanding revenue opportunities.”
The first three months of the year of 2018, Nvidia’s sales of data centers soared 427% year-over-year to $22.6 billion, as businesses purchased graphics processors that could run AI applications. Data center sales grew by 23% over the fourth quarter.
Stock Split, Increased Dividend
Nvidia announced the 10-for-1 stock split will begin on July 7.
The company also increased its cash dividend for the quarter by 150% to penny per share on the post-split basis. In a pre-split scenario the dividend was increased by 4 cents per share up to 10 cents.
In a conference call to analysts CFO Colette Kress stated that large cloud computing providers were the main driver of Nvidia’s data centers business in the last quarter. These customers accounted for about 40 percent of Nvidia’s data center revenues she claimed.
In addition to cloud-based service providers the other businesses that are buying Nvidia equipment to create intelligent AI are consumer Internet firms as well as sovereign states, automobile and health-care companies.
The demand for Nvidia’s graphics processing units, also known as GPUs, will likely outstrip supply throughout the next calendar year. Kress said.
Nvidia Stock: ‘Next Wave Of Growth’ Ahead
A strong interest in Nvidia’s Hopper series of processors designed for the generative AI learning and inference has fueled the company’s growth in data centers in the first quarter of 2018, Huang explained.
“We are poised for our next wave of growth,” Huang stated. “The Blackwell platform is in full production and forms the foundation for trillion-parameter-scale generative AI. Spectrum-X opens a brand-new market for us to bring large-scale AI to Ethernet-only data centers. And Nvidia NIM is our new software offering that delivers enterprise-grade, optimized generative AI to run on CUDA everywhere — from the cloud to on-prem data centers and RTX AI PCs — through our expansive network of ecosystem partners.”
Blackwell Revenue Accelerated
Nvidia increased the timeline to generate Blackwell series revenues. The company anticipates to ship production batches of Blackwell products to begin in the current quarter and will ramp up in the third quarter of 2013, Huang explained. Data centers with Blackwell processors are expected to be operational in the fourth quarter of this year, Huang stated.
“We will see a lot of Blackwell revenue this year,” Huang stated during the call conference.
Several Investor Worries
The biggest concerns of investors in the wake of Nvidia’s annual report included the effects on U.S. trade restrictions with China and the ability of the company to obtain enough components from contract suppliers to meet demands.
Analysts are also concerned about the possibility of an “air pocket” in sales of the current Hopper models of graphics processing unit, when Blackwell series GPUs go on sale later in the year.
The top cloud service providers are investing heavily in Nvidia GPUs to increase their capacities to support generative artificial intelligence.
Nvidia Innovation On A ‘Very Fast Rhythm’
In the conference call, an analyst was asked by an analyst whether Nvidia does to meet its ever-growing order backlog.
Huang said that demand for the product is high in what he called major shifts in platform. “We’re racing every single day. Customers are putting a lot of pressure on us to deliver,” Huang stated.
Another analyst was curious about what Nvidia plans to launch following its current Blackwell processors.
Huang stated: “Well, I can say that following Blackwell, we’ll be launching a second chip. We’re currently on a year-long rhythm. Also, you can count on our network technology being updated at a fast pace.”
Nvidia Report Lifts Other AI Plays
Nvidia results and its guidance provided an albeit modest boost to other AI companies. AI chipmakers Broadcom (AVGO), Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing (TSM) and Astera Labs (ALAB) increased from 1 percent to 3% during the closing hours of trading.
ServiceNow (NOW) increased slightly in the meantime, Dow the giant Microsoft (MSFT) gained a bit.
Vertiv (VRT) along with Powell Industries (POWL) also advanced.
Super Micro Computer (SMCI) and Dell Computer (DELL), both of which use Nvidia chips inside the AI servers, grew by 4.5 percent and 3.9 percent respectively.
‘Get The Popcorn Out’
To say that Nvidia’s fiscal quarter 1 report is closely scrutinized is an understatement.
“When Nvidia holds its conference (call), you will be able to hear a pin drop on trading floors across Wall Street when (CEO) Jensen (Huang) gets the microphone,” Wedbush Securities analyst Daniel Ives said Wednesday morning in a client letter that reads “Get the Popcorn Out.”
He said, “The AI Revolution starts with Nvidia and in our view the AI party is just getting started with the popcorn getting ready.”
Wedbush rates Nvidia stock as an outperform, with a an estimated price of 1,000.
Nvidia Stock Weighs Heavily In Indexes
The stock’s price explosion has resulted in it having a large importance in the stock market’s key indexes and exchange traded funds. On on Monday Nvidia was a part of 5.3 percent of S&P 500 index, 6.5 percentage of Nasdaq 100, and 20.6 percent in the VanEck Semiconductor Exchange Traded Fund Mizuho Securities said.
In the year prior, Nvidia stock rocketed 239 percent to 495.22. Through the close of Wednesday, Nvidia stock is up 92%..
The next catalyst for Nvidia stock is Huang’s keynote speech on June 2, at the Computex trade event. Chipmakers’ chief executive officers AMD (AMD), Intel (INTC) and Qualcomm (QCOM) are also present at the Taiwan event.
Futures: Nvidia Earnings Boom Again; Will That Offer Market Catalyst?
Nvidia On Several IBD Stock Lists
Nvidia stock is listed on five IBD list of stocks, including Leaderboard, IBD 50, Big Cap 20, Sector Leaders and Tech Leaders.
Additionally, Nvidia stock is one of the Magnificent Seven stock which had a massive rise in the this year.
Nvidia stock was closed on Wednesday within the buy-to-sell range of 922.20 cup with a handle purchase point.
IBD Editors Ed Carson and Benjamin Pimentel were the authors of this report.
You can follow Patrick Seitz on X, previously Twitter @IBD_PSeitz. @IBD_PSeitz for more news on software, consumer technology and semiconductor shares.
