Nvidia saw its already-pumped stock rise above $1,000 a share on Thursday during early trading hours.
The chipmaker, known for its pivotal role in powering artificial intelligence (AI), saw its first-quarter revenues surge to $26.04 billion, up 262 percent from the same quarter last year.
The company’s data center business, which includes sales of its high-powered graphics processing units (GPU) for AI applications, was a major driver of this growth. Revenue from this segment rose to $22.6 billion, a 427 percent increase from the previous year.
This growth underscores Nvidia’s leading position in the AI chip market and the increasing demand for its products in the data center industry.
The company also announced a 10-for-1 stock split on Wednesday, a move that it noted will make its shares more accessible to employees and investors.
The strong financial results reflect Nvidia’s dominance in the AI chip market, a position that has been solidified by its early investments in AI technology. The company’s GPUs are widely used in generative AI products, which have seen a surge in demand in recent years.
“Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform,” Jensen Huang, the Nvidia CEO, said in a statement on Wednesday. “Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets.”
The company’s market capitalization has also grown to about $2.3 trillion, making it the third most valuable company in the world.
“Nvidia has had a fantastic quarter,” Daby Carreras, a financial expert, told The Epoch Times. “They’ve beaten expectations on both revenue and earnings per share, surpassing all forecasts. What really stands out is their announcement of a 10-for-1 stock split. This means for every share you own, you'll get an additional nine shares. This split will take effect after the market closes on June 6, and will be reflected in accounts by June 7.”
Mr. Carreras is a private wealth manager at Spartan Capital Securities and a former candidate for New York City comptroller in 2021, with experience in venture capital as well as real estate.
He explained that stock splits are often a sign of confidence in a company.
“When a company like Nvidia announces a stock split, it’s saying they believe the stock price will continue to rise and they want to make shares more accessible to a broader range of investors. It’s a positive signal to the market.”
The expert noted that despite some market adages such as “sell in May and go away,” Nvidia’s move suggests a different strategy.
“This tells me that the market might hold strong through the summer, at least until the stock split happens. People are likely to hold onto their shares to get those additional ones, which could keep the stock price buoyant.”
Mr. Carreras also highlighted the broader implications of Nvidia’s success, explaining that the company has significantly expanded its market presence beyond graphics cards, with its processors now in high demand across various sectors, including AI development and data centers. The company is not only competing with other industry giants such as AMD and Marvell but is also leading in innovation. He said he believes that this strong performance and strategic planning suggest that Nvidia is likely to remain a market leader in the foreseeable future.
When asked about the long-term outlook, Mr. Carreras remained cautiously optimistic.
“Short-term, this is great news for Nvidia and its shareholders. Long-term, it will depend on how well they continue to innovate and manage competition. But right now, it’s a good time to be holding Nvidia.”
Mr. Carreras reflected on the current market atmosphere.
“It’s like a game of chess, and Nvidia is making all the right moves to control the board,” he said. “They’ve set themselves up for continued success, and it’s an exciting time for investors who are part of that journey.”
However, Mr. Carreras does caution against overconfidence in a certain narrative for investment.
“Pair trades will make sense in a lot of brokers that straddles because they wanted to be prepared for either side of this movement, they just anticipated that the movement will be pretty vigorous, but now we understand how vigorousness [can also become] volatility.”
Nvidia’s earnings report for the first quarter of 2024 demonstrates the company’s strong financial performance and its leading position in the AI chip market. The significant growth in revenue and net income reflects the increasing demand for AI technologies and Nvidia’s dominance in this rapidly growing market.
