Nvidia (NVDA -2.85%) has delivered such growth in recent years -- with revenue soaring in the double and triple digits and to record levels -- that investors were starting to wonder if the artificial intelligence (AI) giant soon would run out of steam. The concern was that Nvidia's best days might have already passed. After all, such a pace of growth generally doesn't last forever.
To make matters worse, over the past couple of months, a backdrop of concerns about import tariffs and AI chip export restrictions to the major market of China prompted some investors to think twice before getting in on Nvidia stock -- even as it was trading at bargain levels. They worried that a potential slowdown was indeed happening.
That's why all eyes were on Nvidia's quarterly earnings report this week, with investors hoping to gather clues about current AI demand and prospects ahead. And Nvidia Chief Executive Officer Jensen Huang uttered a key phrase that set the tone for the months and quarters to come. Let's consider what may happen next.
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Setting the pace in the AI boom
Nvidia has charged ahead in this AI boom thanks to its chip, which have become the most sought-after worldwide, and its entire range of AI products and services. All of this has helped supercharge revenue, lifting it to a record $130 billion in the latest fiscal year, and push the stock to gains of more than 800% over the past two years.
And in the latest three-month period Nvidia continued to do something it's done quarter after quarter. It topped analysts' revenue and profit estimates, and this time, it did this in spite of a major headwind, a halt to its H20 chip exports to China. During the quarter, the U.S. said the previously authorized H20 now would require an export license. As a result, Nvidia announced a charge of $5.5 billion, which it lowered to $4.5 billion as it was able to reuse certain H20 materials.
Overall revenue climbed 69% in the quarter to more than $44 billion, and data center revenue, which includes AI products and services, surged 73% to $39 billion. Diluted earnings per share, excluding the H20 charge and tax impact, came in at $0.96 cents per share.
"A powerful new wave of growth"
Now, let's move on to the Huang comments. "This is the start of a powerful new wave of growth," he said during Nvidia's earnings call. "We're off to the races. We now have multiple significant growth engines."
The idea is that today and into the future Nvidia is gaining from AI on many levels. It continues to power the training of models, but its chips also now drive inference reasoning, or the AI's process of thinking through a complex problem and generating the best answers. And it's also benefiting, and set to see more gains, in the areas of sovereign AI, enterprise AI, and more as countries and companies aim to scale their AI projects.
Nvidia said it saw a "sharp jump" in demand for inference in the quarter, and its latest platform, Blackwell, has led to a 30x increase in inference throughput. Even better, Nvidia has a history of continually improving its architecture so Blackwell won't stop here. For example, over two years, Nvidia increased the inference performance of its Hopper architecture by 4x.
What's next for Nvidia?
Considering all of this, what happens next for Nvidia's earnings and stock performance? Nvidia may not deliver triple- or quadruple-digit revenue gains in the future, but that isn't a reason to be disappointed. It's normal for a company's growth to explode higher in those proportions when it's starting from low revenue levels, such as during the very start of the AI boom.
Today, the year-ago quarters already represent an extremely high level of revenue -- so Nvidia's double-digit growth represents strong performance. This should continue, with Nvidia expecting a 50% year-over-year jump in revenue in the second quarter, to about $45 billion.
And Nvidia's ongoing innovation in the AI chip market should keep it in a dominant position, helping it further prosper as the buildout continues and as AI is actually used across industries.
All of this is great news for the stock price, as this earnings momentum suggests that Nvidia, even after soaring in recent years, still has plenty of room to run.
