Nvidia, the leading chipmaker, reported impressive earnings for the first quarter of fiscal year 2025, driven by a surge in demand for artificial intelligence (AI) chips. The company also announced a 10-for-1 stock split, which propelled its share price beyond the $1,000 mark for the first time during after-hours trading on Wednesday. This move underscores Nvidia’s strong performance and optimistic future outlook.
Record Revenue and Stock Split
Nvidia’s revenue soared 262% to $26.04 billion, with earnings per share reaching $6.12, both exceeding market forecasts of $24.65 billion and $5.95, respectively. The company’s non-GAAP gross margin also rose to 78.9% from 76.7% in the previous quarter. To make shares more accessible, Nvidia announced a 10-for-1 stock split, set to take effect on June 10, lowering the price of individual shares to around $100 each post-split.
Data Center Revenue Leads the Surge
Nvidia’s Data Center segment, its most profitable division, saw revenue jump to $22.6 billion, marking a 23% sequential increase and a staggering 427% rise from the same quarter last year. This exceeded analyst expectations of $21 billion. For the upcoming quarter ending in July, Nvidia projects revenue of $28 billion, surpassing analyst estimates of $26.6 billion. CFO Colette Kress highlighted that 45% of Data Center revenue came from major cloud providers like Alphabet, Microsoft, Meta Platforms, and Amazon.
AI Innovations and Strategic Partnerships
CEO Jensen Huang expressed confidence in Nvidia’s future growth, particularly with the introduction of the Blackwell AI GPU platform. Launched in March, Blackwell promises to reduce operating costs and energy consumption for large language model (LLM) inference by up to 25 times. Nvidia’s strategic shift aims to diversify its product offerings across various sectors, including automotive, healthcare, and consumer internet companies, expanding its reach beyond cloud businesses. Huang emphasized the importance of the partnership with Dell Technologies in developing AI infrastructure for a broader customer base.
Enhanced Shareholder Returns
Alongside its financial achievements, Nvidia increased its cash dividend to 10 cents per share, a significant rise from the previous four cents per share. The company also executed share repurchases worth $7.7 billion and distributed $98 million in dividends. With a Price-to-Earnings ratio of 80 and consistent year-on-year revenue growth exceeding 200% over the past three quarters, Nvidia’s stock appears well-valued. The company’s forward guidance of $28 billion in revenue for the July quarter suggests continued strong performance, with the potential for further market valuation increases following the stock split.
SOURCE: Ref Image from Reuters
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