Nvidia (NVDA 2.94%) published fourth-quarter results after the market closed on Wednesday, and the report was nothing short of incredible. Despite sky-high expectations, the artificial intelligence (AI) leader actually delivered results that were far better than Wall Street anticipated. The graphics processing unit (GPU) technology company's share price soared in after-hours trading.
Nvidia posted non-GAAP (adjusted) earnings per share of $5.16 on revenue of $22.1 billion in Q4. Meanwhile, the average analyst estimate had called for per-share earnings of $4.64 on sales of $20.6 billion. The GPU specialist delivered another blowout quarter, and its stock is surging again thanks to the results.
Can investors still score big wins with this incredible AI stock?
NASDAQ: NVDA
Key Data Points
Nvidia's Q4 report was one for the record books
With the guidance that it issued for Q4, Nvidia said it expected to record roughly $20 billion in revenue. Hitting that target would have meant posting year-over-year sales growth of roughly 231%. That would have been an absolutely stellar performance, but the semiconductor designer's actual results came in far better than that.
Thanks to AI-related demand powering magnificent growth for the company's data center segment, Nvidia managed to grow its revenue 265% year over year in the fourth quarter. Incredibly, the company's data center segment sales skyrocketed 409% compared to the prior-year period to hit $18.4 billion. Rapid sales growth and stellar margins pushed the company's adjusted earnings per share up 486% compared to Q4 2022.
For the first quarter of this year, Nvidia is guiding for revenue of $24 billion. Meanwhile, the average analyst estimate had guided for sales of $22.17 billion in the period. The business is crushing expectations, and it looks like the strong performance is poised to continue.
If Nvidia were to hit its target for sales of $24 billion in this year's first quarter, that would mean growing revenue roughly 234% year over year. Given that the company has actually been quite conservative with its performance forecasts lately, there's a fair chance that the AI frontrunner will actually significantly exceed its current sales guidance.
It's not too late to buy Nvidia stock
Nvidia stock has been on an incredible rally, and it's delivered performance that backs up the valuation surge. Prior to its Q4 earnings release, the stock had been up roughly 228% over the last year -- and now it's rocketing even higher.
Even on the heels of such explosive gains, I think the stock has what it takes to deliver more wins for long-term investors. As Nvidia's founder and CEO, Jensen Huang, said in the company's Q4 press release: "Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations."
The company looks poised to retain its leadership position in GPUs used for artificial intelligence and other accelerated applications, and it's still in the early stages of tapping into other massive long-term opportunities.
Nvidia has already rolled out suites of industry-specific software tools designed to help developers build and run AI applications. Subscription-based cloud software is typically a very high-margin business, and Nvidia's position as a leader in artificial intelligence technologies gives it some natural footing to deliver supplementary software that can be sold to its existing customer base.
Even more promising, Nvidia is making a play in the cloud computing services space. Right now, the company provides key hardware that underpins its customers' data centers. But the company is also now leveraging its huge lead in hardware technologies to begin offering artificial intelligence as a service. Nvidia's lead in GPU technologies puts it in an excellent position to expand its own data centers and sell AI computing power as a service directly to customers.
While the massive run-up for Nvidia stock and hype surrounding AI raise questions about whether the surge has created a valuation bubble, there are good reasons to believe that isn't the case. Artificial intelligence is a real game changer, and Nvidia's dominance in crucial tech categories positions its stock to be a market-crushing winner.
