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Nvidia Shares Soar Past $1,000 on AI Surge

Nvidia surged past $1,000 for the first time, fueled by fiscal first-quarter results, outperformed analyst predictions
May 23, 2024

In a remarkable leap, Nvidia shares soared past the $1,000 mark in extended trading on Wednesday, driven by robust fiscal first-quarter results that exceeded analyst expectations. This milestone underscores Nvidia's pivotal role in the ongoing AI revolution that has captivated investors and tech enthusiasts alike.

Nvidia's earnings report is increasingly seen as a barometer for the AI industry's vitality. The latest figures from Nvidia reveal a strong and growing demand for their AI chips, which are at the heart of this technological surge. CEO Jensen Huang announced that the company anticipates significant revenue from its upcoming AI chip, Blackwell, later this year, further cementing Nvidia's dominance in the sector.

The stock's 7% rise in after-hours trading is set to propel it to new heights on Thursday. Additionally, Nvidia revealed a 10-for-1 stock split, a move likely to attract more investors by making shares more affordable.

For the quarter, Nvidia reported earnings per share of $6.12, surpassing the $5.59 consensus estimate. Revenue reached $26.04 billion, beating the expected $24.65 billion. Looking ahead, Nvidia projects sales of $28 billion for the current quarter, ahead of Wall Street's $26.61 billion forecast.

Nvidia's net income for the quarter ending April 28 was an impressive $14.88 billion, or $5.98 per share, compared to $2.04 billion, or 82 cents, a year ago. This surge is fueled by tech giants like Google, Microsoft, Meta, Amazon, and OpenAI, which are investing heavily in Nvidia’s high-end graphics processing units (GPUs) to power their AI endeavors.

Highlighting Nvidia's dominance, the company's data center sales, which include its AI chips, saw a staggering 427% increase from the previous year, totaling $22.6 billion. Nvidia CFO Colette Kress attributed this growth to the high demand for Hopper GPUs, notably the H100 model, which has been pivotal for projects like Meta's Lama 3.

Kress also noted that cloud service providers contribute nearly half of Nvidia's data center revenue. CEO Huang emphasized that the upcoming Blackwell GPUs will drive further growth, with significant revenue expected by year-end as the new chips are deployed in data centers.

Nvidia's networking segment also thrived, with revenue tripling to $3.2 billion, largely due to the rising need for advanced networking solutions like InfiniBand as companies expand their AI infrastructures.

Once primarily known for gaming hardware, Nvidia's gaming revenue climbed 18% to $2.65 billion, spurred by continued strong demand. Other segments, though smaller, showed solid performance: professional visualization sales reached $427 million, and automotive sales hit $329 million.

In a show of financial strength, Nvidia repurchased $7.7 billion worth of its shares and distributed $98 million in dividends during the quarter. The company is also increasing its quarterly cash dividend from 4 cents to 10 cents per share on a pre-split basis, translating to 1 cent post-split.

Nvidia's latest financial results not only highlight its leading position in the AI chip market but also its strategic foresight in expanding and diversifying its product offerings. As AI technology continues to evolve, Nvidia is well-positioned to remain at the forefront, driving innovation and growth in the tech industry.

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