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Nvidia: The Most Important Stock on Planet Earth Delivers Again

Published 22/02/2024, 12:07
Updated 09/07/2023, 11:31

NVIDIA's (NASDAQ:NVDA) quarterly results easily surpassed expectations, as expected, with revenues of $22.1 billion and earnings per share of $5.16, exceeding analyst forecasts. The Datacenter segment notably performed exceptionally well, reaching record levels of around $18.4 billion

Shares initially fell on the report as investors digested another set of impressive results. The stock, which has been described by Goldman Sachs (NYSE:GS) analysts as “the most important stock on planet earth,” is indicated higher.

"The market was poised to sell the news following Nvidia's earnings, given the sky-high expectations and deteriorating macro conditions," Investing.com analyst Thomas Monteiro told Reuters.

"However, once again, the company left no doubt that the AI boom is much more than just a stock market narrative, but rather, the most significant bet from corporations worldwide at this moment."

How Nvidia Performed in Q4

NVIDIA's fourth-quarter results for the fiscal year were nothing short of impressive, significantly surpassing consensus expectations and reaffirming the company's position as an undisputed leader in the red-hot AI chips market.

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Jensen Huang, founder and CEO of NVIDIA.

Revenues for the quarter stood at $22.1 billion, exceeding both analyst estimates and the company's guidance. The standout performer was the Datacenter segment, which achieved record levels of approximately $18.4 billion, driven primarily by accelerating demand for generative AI and strong reception of Hopper products and networking solutions.

“Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies. Vertical industries — led by auto, financial services and healthcare — are now at a multibillion-dollar level.”

Gaming sales also remained robust, with revenues reaching $2.87 billion, fueled by better-than-expected GPU sales during the holiday season. Professional Visualization sales experienced robust growth as well, reaching $463 million, driven by strong new product cycles and the integration of AI workloads.

Automotive sales, while down year-over-year, still outperformed expectations at $281 million, buoyed by the ramp-up of Drive Orin and Drive Thor. The company's FQ1 guidance also impressed, with projected revenues of $24.0 billion (up or down 2%) and earnings per share of around $5.40, driven mainly by sustained strength in the Datacenter segment. Both came in ahead of analyst consensus.

These results are likely to highlight NVIDIA's resilience and ability to capitalize on emerging trends in technology, particularly in AI and datacenter solutions. As the company maintains its momentum across all segments, investors and analysts alike are optimistic about its future prospects and potential for further growth and innovation in the coming quarters.

NVIDIA said it will distribute its upcoming quarterly cash dividend of $0.04 per share on March 27, 2024, to all shareholders recorded as of March 6, 2024.

As expected, shares in other AI chipmakers and NVIDIA’s partners surged on Thursday in response to the strong guidance offered by NVIDIA. Its key supplier TSMC saw a significant uptick, rising up to 2.05% in Thursday morning trade. Likewise, shares of server component supplier Super Micro Computer (NASDAQ:SMCI) also surged.

Dutch chip equipment manufacturer ASML, known for supplying TSMC with lithography machines crucial to chip production, also saw its stock rise.

Sales Rise 400% YoY

In the fourth quarter, NVIDIA saw its sales rise 27% from the previous quarter and an impressive 409% surge from the same period last year. The full-year revenue also soared by 217% to reach a record $47.5 billion.

The parabolic rises in revenues comes amid an unprecedented demand for AI chips, the market completely dominated by NVIDIA. In Q4, NVIDIA collaborated with Google (NASDAQ:GOOGL) to introduce optimizations across its data center and PC AI platforms for Gemma, Google’s innovative open language models.

Moreover, the company expanded its strategic partnership with Amazon (NASDAQ:AMZN) Web Services (AWS) to host NVIDIA DGX Cloud on AWS, enhancing accessibility and scalability for customers. Elsewhere, NVIDIA announced a significant development with Amgen (NASDAQ:AMGN), where the pharmaceutical giant will utilize the NVIDIA DGX SuperPOD to drive insights into drug discovery, diagnostics, and precision medicine.

In other segments, NVIDIA made significant strides in gaming with the launch of its GeForce RTX 40 SUPER Series GPUs, offering next-gen technology. These GPUs support the latest NVIDIA RTX technologies, including DLSS 3.5 Ray Reconstruction and NVIDIA Reflex, enhancing gaming experiences for users.

Moreover, the company announced generative AI capabilities for its vast installed base of over 100 million RTX AI PCs. This includes Tensor-RT LLM to accelerate inference on large language models and Chat with RTX, a tech demo enabling users to personalize a chatbot with their own content.

“Fundamentally, the conditions are excellent for continued growth” in 2025 and beyond, Huang told analysts on Wednesday in an earnings call.

Summary

Nvidia once again easily topped analyst expectations, offering robust guidance for FQ1 with projected revenue of $24B and EPS of $5.40. The strong forecast is fueled by sustained Datacenter growth, expected to exceed $20B, driven by high demand for accelerated compute and generative AI, reinforcing prospects for revenue growth in CY24 and CY25.

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Shane Neagle is the EIC of The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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