NVIDIA stocks at all-time high, as revenue jumps 262% from last year, profit up by 628%

NVIDIA Corp, the chipmaker at the centre of an artificial intelligence (AI) boom, has given another bullish sales forecast, indicating that spending on AI computing remains robust.

The company projected second-quarter revenue to reach about $28 billion, surpassing analysts’ expectations of $26.8 billion, according to data compiled by Bloomberg. This optimistic outlook follows better-than-expected results in the fiscal first quarter, which concluded in April.

Nvidia’s profits went up by 628 per cent with revenue going up by 268 per cent compared to 2023’s comparable period, respectively. Needless to say, this was Nvidia’s most profitable and highest sales quarter ever, topping the quarter ending this January’s record $12.3 billion net income and $22.1 billion revenue.

Chief Executive Officer Jensen Huang expressed confidence in the trajectory, stating, “The next industrial revolution has begun.” He emphasized the transformative potential of AI, foreseeing significant productivity gains across various industries. Huang highlighted AI’s role in enhancing cost efficiency, energy conservation, and revenue expansion for businesses.

NVIDIA’s prominent position as a major beneficiary of AI spending is underscored by the soaring demand for its AI accelerators. These specialised chips facilitate the development of cutting-edge AI applications in data centres, propelling the company’s sales. NVIDIA’s market valuation has soared, exceeding $2.3 trillion.

In response to the positive forecast, NVIDIA’s shares surged approximately 4 per cent in extended trading on Wednesday. The stock had already experienced significant growth, climbing 92 per cent year-to-date, driven by investor optimism regarding the company’s ability to surpass expectations.

Additionally, NVIDIA announced a 10-for-1 stock split and a 150 per cent increase in its quarterly dividend to 10 cents per share. These strategic moves aim to enhance shareholder value and attract new investors.

Founded by Huang in 1993, NVIDIA initially focused on providing graphics cards for computer gamers. However, Huang’s foresight into the suitability of NVIDIA’s chips for AI development opened new avenues, giving the company a competitive edge.

In the fiscal first quarter, NVIDIA reported a remarkable revenue surge, exceeding $26 billion. Adjusted profit stood at $6.12 per share, surpassing analysts’ estimates. The company’s data centre division emerged as the primary revenue driver, generating $22.6 billion, while gaming chips contributed $2.6 billion.

NVIDIA’s strategic vision extends beyond serving cloud-computing giants known as hyperscalers. Huang emphasised the expansion of AI applications to consumer internet companies, automakers, healthcare providers, and sovereign AI initiatives by governments worldwide.

Despite the substantial contribution from hyperscalers to NVIDIA’s data centre revenue, the company is actively diversifying its business. Approximately 45 per cent of data-center revenue is attributed to hyperscalers, indicating the early stages of business diversification.

NVIDIA’s stock price closed at $949.50 per share in the extended session on Thursday, surpassing the $1,000 mark. Following the stock split scheduled for June 7, 2024, one NVIDIA share would be valued at $94.95. Since its IPO in January 1999, NVIDIA shares have surged over 231,485 per cent.

The company’s first-quarter revenue of $26 billion, up 262 per cent year-over-year, exceeded estimates of $24.6 billion. Moreover, NVIDIA delivered a higher-than-expected second-quarter revenue forecast of $28 billion, compared to the estimated $26 billion.

The announcement of a stock split reflects a broader trend among high-priced shares, aiming to reward existing investors and attract new ones amidst ongoing market optimism.