Shares of Nvidia (NVDA 6.18%) skyrocketed 24.7% in after-hours trading on Wednesday following the graphics chip specialist's release of its first-quarter report for fiscal 2024.
Investors' delight is attributable to the quarter's revenue and earnings crushing Wall Street's estimates and management's second-quarter outlook for both the top and bottom lines demolishing analysts' expectations. It's safe to assume that management's super-rosy outlook is the biggest catalyst for the tech stock's huge rise.
Nvidia's key numbers
| Metric | Fiscal Q1 2023 | Fiscal Q1 2024 | Change |
|---|---|---|---|
| Revenue | $8.29 billion | $7.19 billion | (13%) |
| GAAP operating income | $1.87 billion | $2.14 billion | 15% |
| GAAP net income | $1.62 billion | $2.04 billion | 26% |
| Adjusted net income | $3.44 billion | $2.71 billion | (21%) |
| GAAP earnings per share (EPS) | $0.64 | $0.82 | 28% |
| Adjusted EPS | $1.36 | $1.09 | (20%) |
Data source: Nvidia. GAAP = generally accepted accounting principles. Fiscal Q3 2023 ended on Oct. 30, 2022.
Investors should focus on the adjusted numbers, as they exclude one-time items.
Wall Street was looking for adjusted EPS of $0.92 on revenue of $6.52 billion, so Nvidia raced by both expectations.
Platform performance
| Platform | Fiscal Q1 2024 Revenue | Change YOY | Change QOQ |
|---|---|---|---|
| Data center | $4.28 billion | 14% | 18% |
| Gaming | $2.24 billion | (38%) | 22% |
| Professional visualization | $295 million | (53%) | 31% |
| Automotive | $296 million | 114% | 1% |
| OEM and other | $77 million | (51%) | (8%) |
| Total | $7.19 billion | (13%) | 19% |
Data source: Nvidia. OEM = original equipment manufacturers; OEM and other is not a target market platform. YOY = year over year. QOQ = quarter over quarter.
The data center platform's revenue was a record high. In her commentary, CFO Colette Kress said this platform's solid year-over-year and sequential growth was led by "growing demand for generative AI [artificial intelligence] and large language models using GPUs [graphics processing units] based on our Nvidia Hopper and Ampere architectures." Demand for data center products was strong among large consumer internet companies, cloud service providers, and enterprise customers.
"Generative AI enables users to quickly generate new content based on a variety of inputs. Inputs and outputs to these models can include text, images, sounds, animation, 3D models, or other types of data," according to Nvidia.
Kress attributed the gaming platform's continued year-over-year decline to the challenging macroeconomic environment and lower shipments into its sales channel. On the positive side, gaming revenue jumped 22% from the prior quarter, driven by the company's ramp of its new GeForce RTX 40 Series GPUs for desktops and laptops based on its Ada Lovelace architecture.
What the CEO had to say
In the earnings release, CEO Jensen Huang commented on the "surging demand" for the company's products that enable entities to incorporate generative AI into their products and services and internal processes:
A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service, and business process. Our entire data center family of products -- H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU -- is in production. We are significantly increasing our supply to meet surging demand for them.
Powerful second-quarter guidance
For the fiscal second quarter, management expects revenue of $11 billion, which equates to growth of 64% year over year. It also guided (albeit indirectly, by providing a bunch of inputs) for adjusted EPS of $1.97, a surge of 286%.
Going into the report, Wall Street had been modeling for Q2 adjusted EPS of $1.06 on revenue of $7.15 billion, so the company's outlook absolutely crushed both estimates.
Poised for an amazing year
Nvidia's fiscal Q1 results were very good, given the challenging macro environment. The best thing about this quarterly report is the amazingly powerful Q2 guidance, which leaves Wall Street's analysts looking like a bunch of amateurs.
Nvidia already had many long-term avenues for growth (such as cloud computing, non-generative AI, gaming, autonomous vehicles, and the metaverse) before generative AI arrived recently on the scene. Generative AI should significantly rev up Nvidia's long-term growth potential.
