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NVIDIA shares surge on robust FQ1 earnings and stock split news

Published 22/05/2024, 22:22
© Reuters.

On Wednesday, NVIDIA Corporation (NASDAQ:NVDA) reported significant growth in its first fiscal quarter, with a notable 262% year-over-year increase in sales to $26 billion, surpassing Wall Street's expectations of $24.69 billion. Earnings per share (EPS) also soared by 461% compared to the previous year, reaching $6.12, which was higher than the anticipated $5.65. The Data Center business was a standout performer, with sales skyrocketing by 427% year-over-year to $22.6 billion, exceeding the forecast of $21.1 billion. Within this segment, Compute sales jumped by 478% to $19.39 billion, and Networking sales climbed by 242% to $3.1 billion.

The company experienced broad-based growth in the Data Center division, driven by demand from Enterprise and Consumer Internet companies. Large cloud providers, who are major contributors to NVIDIA's Data Center revenue, continued to deploy and expand NVIDIA's AI infrastructure. Gaming revenue was roughly in line with expectations at $2.6 billion, while combined sales from the smaller Professional Visualization and Automotive units were less than $1 billion, with the latter performing better than expected.

NVIDIA also reported gross margins that were nearly 200 basis points above forecasts at 78.9%, compared to the expected 77%. Looking ahead to the second fiscal quarter, NVIDIA anticipates sales of approximately $28 billion, which is above the Street's projection of $26.8 billion. The company targets gross margins of 75.5%, slightly below the Street's estimate of 75.6%.

Additionally, NVIDIA announced a significant 10:1 stock split, with shareholders of record by the close of June 6 set to receive nine additional shares. Trading on a split-adjusted basis is expected to begin on June 10. The quarterly dividend will increase by 150%, although it remains a modest 10 cents per share.

InvestingPro Insights

Following NVIDIA Corporation's impressive fiscal performance, InvestingPro data highlights several key metrics that investors may find valuable. NVIDIA's market capitalization stands at a robust $2.34 trillion USD, reflecting the company's significant presence in the industry. Despite a high P/E ratio of 78.03, which suggests a premium valuation, the company's revenue growth of 125.85% over the last twelve months as of Q4 2024 indicates robust sales performance, aligning with the reported surge in Data Center sales. Moreover, the gross profit margin of 72.72% underscores NVIDIA's strong profitability and pricing power within its sector.

From the array of InvestingPro Tips, two particularly relevant to NVIDIA's current standing are worth noting. Analysts anticipate sales growth in the current year, which correlates with the company's reported sales increase and optimistic sales forecast for the coming quarter. Additionally, NVIDIA's status as a prominent player in the Semiconductors & Semiconductor Equipment industry is reaffirmed by its substantial market cap and gross profit margin, suggesting a strong competitive position.

For those seeking a deeper dive into NVIDIA's financial health and market potential, InvestingPro offers a wealth of additional tips — 21 more to be exact. To explore these insights and make informed investment decisions, consider using the promo code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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