In a recurring theme over the past year, AI leader NVIDIA (NVDA, Financial) outperformed analysts' Q1 earnings and sales estimates, projecting Q2 revenues significantly above consensus. This performance highlights the robust demand for AI. Major tech firms like Meta Platforms (META, Financial), Microsoft (MSFT, Financial), Google (GOOG, Financial), and Tesla (TSLA, Financial) are investing billions in AI. NVIDIA, with its superior chips, continues to benefit greatly, outperforming its closest competitor, Advanced Micro Devices (AMD, Financial).
Despite concerns about potential pullbacks in AI spending, NVDA shares were near all-time highs before its Q1 report, having doubled year-to-date. Investors were worried that customers might reduce orders for NVDA's current AI platform, Hopper, after the announcement of the upcoming Blackwell platform, which promises greater power and efficiency.
However, NVDA not only exceeded high expectations but also eased fears of order delays due to Blackwell. The company assured that demand for AI infrastructure remains strong. Additionally, CEO Jensen Huang mentioned that NVDA expects significant Blackwell-related revenue this year, earlier than the market anticipated, as the company initially projected shipping Blackwell around early 2025.
- NVDA reported adjusted EPS of $6.12, a 400% year-over-year increase, with revenue growing 262% to $26.04 billion, surpassing its forecast of $23.52-24.48 billion.
- Data Center revenue grew 427% year-over-year, driven by strong demand for Hopper GPUs, despite the upcoming Blackwell platform. Other segments, such as Gaming, Professional Visualization, and Automotive, also saw double-digit year-over-year revenue growth.
- NVDA announced a ten-for-one stock split effective June 7 and a $0.01 per share quarterly dividend post-split. While a stock split doesn't change the company's value, it can boost investor enthusiasm and benefit options traders.
- For Q2, NVDA projects revenue of $27.44-28.56 billion, representing approximately 107% year-over-year growth. Non-GAAP gross margins are expected to be around 75.5%, down from 78.9% in Q1, consistent with management's comments on component cost trends.
While NVDA's growth appears unstoppable, risks remain. Tech firms are investing heavily in AI, expecting productivity gains from private companies and governments. However, the timeline for these gains is uncertain, potentially leading to excess supply and reduced orders. Nonetheless, as long as AI capital spending remains robust, NVDA is likely to continue its strong performance.
