Nvidia Stock Surges As AI Chip Demand Powers Q1 Earnings, Outlook Boost

Updated at 5:03 pm EST

Nvidia Corp.  (NVDA) – Get Free Report on Wednesday posted better-than-expected fiscal-first-quarter earnings and a robust near-term sales forecast amid what it called “surging demand” for its artificial-intelligence and data-center semiconductors. 

Adjusted earnings for the three months ended in April came in at $1.09 per share, down 20% from the year-earlier period but well ahead of the Wall Street consensus forecast of 92 cents.

Group revenue, Nvidia said, fell 13% from a year earlier to $7.19 billion, but that figure topped analysts’ estimates of a $6.52 billion tally.

Data-center revenue was a record $4.28 billion, Nvidia said, a 14% increase, “led by growing demand for generative AI and large language models using GPUs based on our NVIDIA Hopper and Ampere architectures”. 

Revenue from gaming chips — which are also used in cryptocurrency mining — fell 38% to $2.24 billion, a move Nvidia said reflected “weaker demand due to the macroeconomic slowdown and lower shipments to normalize channel inventory levels”.

Nvidia Revenue Outlook Ahead of Forecasts

Looking into the current quarter, Nvidia sees revenue of around $11 billion, plus or minus 2%, compared with the Wall Street consensus of $7.15 billion.

“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” Chief Executive Jensen Huang said in a statement.  

“A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”

“Our entire data-center family of products — H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU — is in production,” he added. “We are significantly increasing our supply to meet surging demand for them.”

Nvidia shares were marked 21.5% higher in after-hours trading immediately following the earnings release to indicate a Thursday opening bell price of $371.05 each. That move would extend the stock’s year-to-date gain to around 151%.

Nvidia’s AI outlook is likely to be the key investor focus following Huang’s suggestion that Nvidia’s new AI “supercomputer,” known as Nvidia DGX, could put the company in a leadership position within a market that could be valued at more than $600 billion.

Management consultant Gartner predicts so-called generative AI will account for around 10% of all data produced by the year 2025, up from just 1% in 2021. 

Analysts at KGI see this as adding between $5 billion and $6 billion to Nvidia’s revenue within the next three years. 

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