By Arsheeya Bajwa and Stephen Nellis
(Reuters) – Nvidia on Wednesday forecast quarterly revenue above estimates and announced a stock split, lifting shares to record highs and impressing investors who have tripled the chipmaker’s market value over the past year on AI optimism.
Nvidia shares rose 5.9% to $1,005 in extended trading, peaking above the psychologically important $1,000 mark and adding about $140 billion in market value.
The AI poster child’s shares are up 90% so far this year, and a close after hours on Wednesday during the next day’s Wall Street trading session would be a new record high.
The Santa Clara, California-based company said it would split its shares 10 for one, effective June 7. It also said it would increase its quarterly dividend by 150% to 1 cent per share, based on the split.
“Death, taxes and NVDA weigh on profits. Even against enormous odds, the company once again stepped up and delivered,” said Ryan Detrick, chief market strategist at Carson Group. “The ever-important data center revenue was strong, while future revenue was also impressive.”
The biggest event on Wall Street so far this week, Nvidia’s earnings report, could add new fuel to a stock market rally that has lifted indexes to record highs this year.
Following Nvidia’s results, shares of rival AI-related chipmakers Advanced Micro Devices and Broadcom rose about 2% each.
Alphabet, Microsoft, Amazon.com and other tech companies are competing for a limited supply of Nvidia’s high-end chips as they race to dominate AI computing.
During a conference call with analysts, CEO Jensen Huang said Nvidia’s upcoming Blackwell AI chips will start shipping in the current fiscal quarter, while production will increase in the next quarter.
Chief Financial Officer Colette Kress said demand for Blackwell chips could exceed supply “well into next year.”
Nvidia’s contract chipmaker, Taiwan Semiconductor Manufacturing, has also been working to increase its advanced packaging capacity, a major supply chain constraint for the processors. The Taiwanese company said in April that it expects to more than double its advanced packaging capacity this year.
Nvidia expects second-quarter revenue of $28 billion, plus or minus 2%. Analysts on average had expected revenue of $26.66 billion, according to LSEG data.
First-quarter revenue rose 262% year over year to $26.04 billion, beating expectations of $24.65 billion. Net profit rose 628% to $14.88 billion.
“Demand for NVIDIA’s GPU chips remains strong,” said Logan Purk, analyst at Edward Jones. “These results are likely enough to satisfy investors’ appetites and reassure the market that AI investments have not yet slowed down.”
Nvidia dominates more than 80% of the AI chip market and is uniquely positioned as both the largest enabler and beneficiary of surging AI development.
Revenue in the data center segment, the largest by revenue, grew 427% to $22.6 billion in the first quarter ended April 28, topping estimates of $21.320 billion, according to FactSet data.
Nvidia’s customers include Meta Platforms, which last month raised the midpoint of its 2024 investment forecast by about $4 billion.
The high performance of Nvidia’s chips makes them difficult to replace in today’s AI data centers. What extends this lead is the proprietary CUDA software framework that developers use to program the AI processors.
Although most so-called hyperscalers are also developing their own custom AI chips, analysts don’t expect these to erode Nvidia’s market share.
Nvidia expects second-quarter adjusted gross margin to be 75.5%, plus or minus 50 basis points. Analysts predict on average a gross margin of 75.8%.
Nvidia reported first-quarter adjusted gross margins of 78.9%, compared with estimates of 77%. Aspiring competitor AMD had posted an adjusted margin of 52% in the first fiscal quarter.
Excluding items, the company earned $6.12 per share in the first quarter, beating expectations of $5.59.
(Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis in San Francisco; Editing by Arun Koyyur, Noel Randewich and Matthew Lewis)
