Shares of Nvidia ( NVDA ) rose 9.3% on Thursday, closing above $1,000 for the first time and giving the chip giant a market cap north of $2.5 trillion after reporting first-quarter earnings that again beat forecasts .
Nvidia’s first-quarter results, released after the bell on Wednesday, showed adjusted earnings per share (EPS) of $6.12 on revenue of $26 billion, a jump of 461% and 262% respectively from a year ago.
The company also announced a 10-for-1 stock split and an increased dividend, following the lead of some of its Big Tech peers who handed out heftier quarterly payments to shareholders.
Analysts had expected adjusted earnings per share of $5.65 on revenue of $24.69 billion, according to Bloomberg data. The company reported adjusted earnings per share of $1.09 on revenue of $7.19 billion in the same quarter last year.
For the current quarter, Nvidia expects revenue of $28 billion, plus or minus 2%. That’s better than the $26.6 billion analysts expected.
“Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang said in a statement. “In addition to cloud service providers, generative AI has expanded to consumer internet companies and enterprises. , sovereign AI, automotive and healthcare customers, creating multiple multi-billion dollar vertical markets.”
Wall Street analysts have previously raised concerns about the share of Nvidia’s data center revenue coming from hyperscalers like Microsoft (MSFT), Google (GOOG, GOOGL), Amazon (AMZN) and other Big Tech names. This is especially true as these companies roll out their own AI accelerator chips.
In an exclusive interview with Yahoo Finance following the company’s earnings report on Wednesday, Huang pushed back against concerns that the company could face a demand lull as it transitions between current and next-generation AI chips.
“People want to deploy these data centers now,” Huang said. “They want our [graphics processing units] to work now and start earning money and saving money. And so that demand is just so strong.”
Nvidia’s data center revenue rose 427% year over year to $22.6 billion, accounting for 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its main business, generated revenue of $2.6 billion. CFO Colette Kress said in a statement Wednesday that major cloud providers account for about 45% of the company’s data center revenue.
In a note to clients published Thursday, JPMorgan analysts led by Harlan Sur wrote that Nvidia “maintains a one- to two-step lead over the competition.” JPMorgan raised its price target on Nvidia shares from $850 to $1,150 and reiterated an Overweight rating on shares.
During the company’s earnings call, Kress pointed out that sales from China fell significantly this quarter as the company was forced to halt shipments of its most powerful chips to the country. The company also expects the market in the region to remain highly competitive in the future.
The company’s stock split – which will see shareholders receive 10 shares for every share of the company they currently own – will take effect on June 7, and the new dividend will be paid to shareholders from June 11 on June 28.
The stock split is likely to fuel speculation that Nvidia could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining big tech peers like Apple (AAPL), Amazon and Microsoft.
Nvidia’s increased dividend also follows similar moves announced so far this year by companies like Meta (META) and Alphabet, both of which initiated quarterly dividends for the first time, and Apple, which increased its dividend earlier this month.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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