What happened
Shares of Nvidia (NVDA 3.71%) surged by 36.3% in May, according to data from S&P Global Market Intelligence.
The sharp jump has increased Nvidia's year-to-date gain to 164.3% even as the chipmaker's market capitalization approaches the $1 trillion mark.
Image source: Getty images.
So what
Nvidia reported a mixed set of earnings for its fiscal 2024 first quarter, with revenue clocking in at $7.2 billion. That was down 13% year over year but was 19% higher than the previous quarter. Operating expenses, however, declined by 30% year over year, which resulted in net income that jumped 26% year over year to $2 billion. The company's free cash flow soared by 94.4% year over year from $1.37 billion to $2.66 billion.
What impressed investors, though, was not Nvidia's earnings report, but the guidance that the company gave for its second quarter. The chipmaker expects revenue to come in at around $11 billion plus or minus 2%, a sharp increase from the $6.7 billion registered in the second quarter of last year. This forecast also blew past analysts' expectations of $7.2 billion as Jensen Huang, founder and CEO, highlighted two key trends of accelerated computing and generative artificial intelligence (AI) that will power the industry to new heights.
Huang also gave a keynote speech, his first in almost four years, that showcased his excitement about these two new technologies and how they will usher in a new era in computing. These trends will not only create new business models but also enable existing ones to become more efficient. In addition, he emphasized that a trillion dollars' worth of installed global data center will shift toward accelerated computing as generative AI will be plugged into every product, service, and business process, hence amplifying the need for a massive amount of microchips to be embedded into data centers, gaming, and other products.
Now what
Nvidia has unleashed a new wave of optimism and excitement in the AI space as the company details the potential of this technology to revolutionize the computing and gaming sectors. Accelerated computing will seep into almost every aspect of life, such as the metaverse, gaming, healthcare, financial services, and logistics, to name a few.
In turn, Nvidia envisions an almost $1 trillion total addressable market for the company as it taps into the development of new microchips for industries such as automotive, gaming, and omniverse enterprise software. The future looks like an exciting one for the company as it gears up for even more growth.
