Nvidia Surpasses Q1 2024 Expectations, Prepares for Stock Split in June
In an impressive display of strength, Nvidia (NVDA), the American technology giant, announced better-than-expected earnings for Q1 2024. The company’s exceptional performance in both sales and earnings resulted in a significant boost to its stock price.
One of the standout successes for Nvidia was its data center sales, particularly in the artificial intelligence (AI) chip sector. Revenue reached $26.04 billion, exceeding the projected $24.65 billion. Net income also saw substantial growth, reaching $14.88 billion, or $5.98 per share. Comparatively, in Q1 2023, net income was $2.04 billion, or $0.82 per share.
The surge in revenue was largely attributed to the success of Nvidia’s data center category, which includes AI chips and components for AI servers. Revenue in this sector increased by a staggering 427% to $22.56 billion. Colette Kress, Nvidia’s Chief Financial Officer (CFO), credited the shipment of Hopper graphics processors, particularly the H100 GPU, as a primary driver of this growth. The recent Meta’s Lama 3 announcement, which utilized 24,000 H100 GPUs, also played a significant role.
Networking revenue also experienced dramatic growth, reaching $3.17 billion, over three times higher than the previous year’s Q1. Nvidia’s InfiniBand products played a major part in this increase by supporting the connection of extensive chip clusters.
Moreover, Nvidia’s gaming revenue rose by 18% to $2.65 billion, buoyed by strong demand for its hardware. The company also reported $427 million in professional visualization sales and $329 million in automotive sales.
CEO Jensen Huang expressed confidence in the continued demand for Nvidia’s AI chips, with the company expecting significant revenue from its next-generation AI chip, Blackwell, later in the year. The Blackwell GPU architecture boasts six transformative technologies designed to accelerate various computing processes, including data processing, engineering simulation, electronic design automation, computer-aided drug design, quantum computing, and generative AI.
Nvidia’s stellar performance prompted the company to repurchase $7.7 billion of shares during the quarter and pay $98 million in dividends. The company also announced a 10-to-1 forward stock split to make stock ownership more accessible. Following the split, each record holder of common stock as of June 6, 2024, will receive nine additional shares, to be distributed after market close on June 7, 2024. Split-adjusted trading will commence on June 10, 2024.
In addition, Nvidia raised its quarterly cash dividend from $0.04 to $0.10 per share on a pre-split basis, while post-split, the dividend will amount to $0.01 per share. Looking ahead, Nvidia projects $28 billion in revenue for this quarter.
Following the announcement, NVDA’s stock price soared beyond the $1,000 mark. However, as of the time of writing, it has settled at $1,007.
Nvidia’s exceptional performance has generated optimism in the crypto market, especially among AI-related tokens. In the week leading up to the earnings report release, major AI tokens like Fetch.AI (FET), Render (RNDR), SingularityNET (AGIX), and Bittensor (TAO) experienced increases of approximately 10% to 20%. Nevertheless, these tokens went through a subsequent correction phase after the report’s release, indicating some investors engaging in a sell-the-news approach.