- AI chip giant knocks the lights out again
- Net profits surges to $15 billion
- Stock blasts past $1,000 for first time
Nvidia (NVDA:NASDAQ) continues to knock the ball out of the park and prove the AI (artificial intelligence) revolution is very real. The $2.3 trillion AI powerhouse worshipped by financial markets and Silicon Valley, has to pass increasingly tough tests of investor’s faith with every quarter that passes, and it keeps on delivering.
Quarterly revenues (to end Apr) were +262% versus the +241% expected, net income was up to almost $15 billion, free cash flow nearly sextupled to $14.9 billion year-on-year. Monster indeed.
Guidance for next quarter was even more upbeat than the firmest believers had hoped, with strong demand for the new Blackwell chips predicted – what’s not to like?
$1,000+ SHARE PRICE
‘We will see a lot of Blackwell revenue this year’, said chief executive Jensen Huang. Worries about ‘air pockets’ in demand were dismissed. It was the hefty beat the market wanted. After-market trading saw the stock rally close on 7% implying a record $1,012, the first time above $1,000.
Nvidia also plans a 10-for-1 stock split aimed at making it easier for staff and ordinary investors to buy shares.
‘Keeping this pace is critical because they’re training customers not to wait for the next chip’, posted tech analyst Gene Munster on X. ‘For their customers, time to train and the race to AGI (artificial general intelligence) is all that matters. This means Nvidia is in a great spot for the next few years’, the analyst said.
That makes Amazon’s (AMZN:NASDAQ) decision to switch an order to the next generation of Nvidia’s products rather that use last year’s chips something to watch, reckons AJ Bell investment director Russ Mould.
‘Any sign that other companies are following the same line of thinking could cause short-term disruption to Nvidia. It makes sense to go for the latest technology and get the most powerful capabilities possible, particularly as AI’s capabilities are developing so fast’, he said.
SUSTAINED BOOM
But right now, everyone wants to ride the Nvidia gravy train. Key Banc Capital Markets analyst John Vinh predicts auto companies such as Tesla (TSLA:NASDAQ) will be the largest enterprise verticals this year, potentially driving several billion in revenues, but the analyst also anticipates sovereign AI deployment to start to inflect, contributing high-single-digit billion dollar revenue this year.
Vinh expects near-term growth to be driven by the ramp of H200 and initial contributions from B100. ‘We’re encouraged with the strong results… and view Nvidia as best positioned in semis to benefit from Generative AI’, he said.
The prospect of a sustained boom bolstered Nvidia’s Asian suppliers, including memory chip manufacturers SK Hynix (000660:KRX) and Samsung (005930:KRX), as well as contract semiconductor firm TSMC (TSM:NYSE).
Popular growth-inspired Scottish Mortgage (SMT) rose more than 2% early on Thursday, with Nvidia its largest stake at 8% of the investment trust.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Martin Gamble) own shares in AJ Bell.
