Nvidia Reveals Stock Split, Expects Higher-than-Expected Quarterly Sales By Reuters

Written by Arsheeya Bajwa and Stephen Nellis

(Reuters) – NVIDIA (NASDAQ:) forecast better-than-expected quarterly revenue on Wednesday and announced a stock split, boosting its stock to record highs and rewarding investors who have tripled the chipmaker’s market value over the past year on AI optimism. It left a deep impression.

Nvidia shares rose 5.9% to $1,005 in extended trading, peaking above the psychologically important $1,000 mark for the first time. AI Poster Children’s stock price has risen more than 90% this year alone.

The Santa Clara, California-based company said the 10-for-1 stock split will be effective June 7. It also said it would increase its quarterly dividend by 1 cent per share to 150% after the split.

“Death, taxes and NVDA outpace returns. Despite huge expectations, the company has once again stepped up and delivered,” said Ryan Detrick, chief market strategist at the Carson Group. “Data center revenues, which are always important, were strong and future earnings were also impressive.”

Nvidia’s earnings report, a major event on Wall Street this week, could add new fuel to the stock market rally that has driven the index to record highs this year.

Following Nvidia’s results, shares of rival AI-related chip makers Advanced Micro Devices (NASDAQ:) and Broadcom (NASDAQ:) each rose about 2%.

Alphabet (NASDAQ:), Microsoft (NASDAQ:), Amazon.com (NASDAQ:) and other technology companies have been vying for a limited supply of Nvidia’s advanced chips as they race to dominate AI computing.

On a conference call with analysts, CEO Jensen Huang said Nvidia’s upcoming Blackwell AI chips will launch in the current fiscal quarter, with production ramping up in the next quarter.

CFO Colette Kress said demand for Blackwell chips could exceed supply “even next year.”

Taiwan Semiconductor Manufacturing, Nvidia’s contract chipmaker, has also been working to increase capacity for advanced packaging, a key supply chain constraint for processors. The Taiwanese company said in April that it expected its advanced packaging capacity to more than double this year.

NVIDIA forecast fiscal second quarter revenue of $28 billion (+/-2%). Analysts on average were expecting revenue of $26.66 billion, according to LSEG data.

First quarter revenue increased 262% year-over-year to $26.04 billion, surpassing expectations of $24.65 billion. Net profit increased 628% to $14.88 billion.

“Demand for NVIDIA’s GPU chips remains hot,” said Edward Jones analyst Logan Purk. “These results will be enough to satisfy investor appetite and reassure the market that AI investment is not yet slowing down.”

With more than 80% of the AI ​​chip market, Nvidia is in a unique position as both a beneficiary and biggest enabler of burgeoning AI development.

Sales in the data center segment, the largest by revenue, rose 427% to $22.6 billion in the first quarter ended April 28, beating estimates of $21.32 billion, according to data from FactSet.

Among Nvidia’s customers is Meta Platforms (NASDAQ:), which last month increased the midpoint of its 2024 capital spending forecast by about $4 billion.

The high performance of Nvidia chips makes them difficult to replace in current AI data centers. Added to this is the proprietary CUDA software framework that developers use to program AI processors.

Most so-called hyperscalers are also developing their own custom AI chips, but analysts don’t expect them to eat into Nvidia’s market share.

NVIDIA expects second quarter adjusted gross margin to be 75.5% ± 50 basis points. Analysts on average expect gross margin to be 75.8%.

Nvidia reported first-quarter adjusted gross margin of 78.9%, compared to estimates of 77%. Competitor AMD posted an adjusted margin of 52% in its fiscal first quarter.

Excluding items, the company reported first-quarter earnings of $6.12 per share, beating expectations of $5.59.