Please ensure Javascript is enabled for purposes of website accessibility

Why NVIDIA Corporation Jumped 13% Today

By Anders Bylund - May 13, 2016 at 11:52AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The former graphics specialist is finding massive growth opportunities in data centers and in-car computing, fueling a lights-out Q1 report.

fancy NVIDIA logo

Image source: NVIDIA.

What: NVIDIA (NVDA -1.36%) shares soared as much as 13.2% higher on Friday morning, lifted by a muscular first-quarter report. Share prices have now nearly doubled over the last 52 weeks.

So what: In the first quarter, NVIDIA saw sales rising 14% year over year to $1.31 billion. Adjusted earnings grew by 39%, landing at $0.46 per diluted share. Analysts would have settled for earnings of $0.32 per share and sales around $1.26 billion.

Management guided second-quarter revenue to roughly $1.35 billion, for a 17% boost over the year-ago period. Non-GAAP earnings should add up to approximately $0.35 per share, a large increase over the $0.05 earnings per share NVIDIA recorded a year earlier. These targets are also ahead of Wall Street's current estimates.

Revenue growth was particularly strong in the automotive and data center segments, where NVIDIA taps into the macro growth trend with compelling products.

Looking ahead, NVIDIA just announced brand-new chips based on the long-awaited Pascal processor architecture, promising large performance increases and lower energy usage -- all at a lower price point thanks to more efficient manufacturing processes. These chips are currently being produced at "full volume" and should start shipping in June.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Now what: Data center sales increased more than 62%, driven by rising global interest in so-called deep learning systems. NVIDIA chips originally designed for graphics processing happen to be fantastic at the kind of number-crunching these systems require, so this is a major growth driver for the company today.

Automotive sales jumped 46% higher, driven mostly by high demand from European car makers. That's not a bad place to start, and NVIDIA CEO Jen-Hsun Huang sees plenty of room for geographic growth based on this Euro-centric platform:

"In the future we're going to see a lot more success with automotive here in the United States, here in Silicon Valley, in China," Huang said on an earnings call with analysts. "We're going to see a lot more global penetration because of our self-driving car platform."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NVIDIA Corporation Stock Quote
NVIDIA Corporation
NVDA
$153.30 (-1.36%) $-2.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.