Nvidia has once again exceeded market expectations with its Q1 2024 earnings report, achieving revenue of $26.0 billion for the first quarter, up 18% from the previous quarter and up 262% from a year ago. The company also announced a significant 10-for-1 stock split and an increased dividend, aligning itself with other major tech firms that have recently enhanced shareholder returns.
For the first quarter, Nvidia reported adjusted earnings per share (EPS) of $6.12 on revenues of $26 billion, marking an astonishing growth of 461% in EPS and 262% in revenue compared to the previous year. These figures far surpassed analysts’ predictions, which had anticipated an EPS of $5.65 on revenues of $24.69 billion. This is a stark contrast to the same period last year, where the company reported an EPS of $1.09 on revenues of $7.19 billion.
Looking ahead, Nvidia projects revenues of $28 billion for the current quarter, with a margin of plus or minus 2%, which again exceeds the $26.6 billion forecasted by analysts. This optimistic outlook has positively impacted Nvidia’s stock, which saw a 4% rise in extended trading.
A significant driver behind this growth is the burgeoning demand for generative AI training and inference on Nvidia’s Hopper platform. CEO Jensen Huang highlighted that beyond cloud service providers, the demand for generative AI has expanded into various sectors, including consumer internet companies, enterprise, sovereign AI, automotive, and healthcare. This expansion has opened up multiple multibillion-dollar vertical markets for Nvidia.
However, Wall Street analysts have expressed concerns regarding the proportion of Nvidia’s Data Center revenue that comes from hyperscalers such as Microsoft, Google, and Amazon. These tech giants are increasingly developing their own AI accelerator chips, potentially reducing their reliance on Nvidia. Despite these concerns, Nvidia’s CFO Colette Kress noted that large cloud providers still accounted for approximately 45% of the company’s Data Center revenue.
The Data Center segment itself saw a remarkable 427% year-over-year increase, reaching $22.6 billion and making up 86% of the company’s total revenue for the quarter. Nonetheless, Kress pointed out a significant decline in revenue from China due to halted shipments of Nvidia’s most powerful chips to the country. She also warned of a highly competitive market in the region moving forward.
In contrast, Nvidia’s gaming segment, once its primary revenue driver, reported revenues of $2.6 billion. This shift underscores the company’s strategic pivot towards more lucrative and rapidly growing markets.
The announced stock split, effective June 7, will see shareholders receive 10 shares for each one they currently hold. The new dividend will be paid on June 28 to shareholders of record as of June 11. This split is likely to spark speculation about Nvidia’s inclusion in the price-weighted Dow Jones Industrial Average, potentially joining other tech titans such as Apple, Amazon, and Microsoft. Post-split, Nvidia’s shares are expected to trade at around $98, down from nearly $980 in after-hours trading.
Nvidia’s enhanced dividend follows a trend seen among other tech giants like Meta and Alphabet, both of which initiated quarterly dividends this year, and Apple, which recently increased its dividend.
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