Nvidia Stock Surges As AI Chip Demand Powers Q1 Earnings, Outlook Boost

Updated at 4:35 pm EST

Nvidia Corp.  (NVDA) - Get Free Report posted better-than-expected first quarter earnings Wednesday, and a robust near-term sales forecast amid what it called a 'surging demand' for its AI and data center semiconductors. 

Nvidia said adjusted earnings for the three months ending in April, the group's fiscal first quarter, came in at $1.09 per share, down 19.9% from the same period last year and well ahead of the Street consensus forecast of 92 cents per share.

Group revenues, Nvidia said, fell 13.3% from last year to $7.19 billion, but that figure that topped analysts' estimates of a $6.52 billion tally.

Data center revenues were pegged at a record $4.28 billion, Nvidia said, a 14% increase from last year. Revenues from gaming chips -- which are also used in cryptocurrency mining -- fell 38% to $2.24 billion

Looking into the current quarter, Nvidia said it sees revenues of around $11 billion, plus or minus 2%, compared to the Street consensus of $7.15 billion.

“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said CEO Jensen Huang.  “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," he added. "We are significantly increasing our supply to meet surging demand for them."

Nvidia shares were marked 16.9% higher in after-hours trading immediately following the earnings release to indicate a Thursday opening bell price of $357.00 each, a move that would extend the stock's year-to-date gain to around 143%.

Nvidia's AI outlook is likely to be the key investor focus following Huang's suggestion that Nvidia's new AI "supercomputer", known as Nvidia DGX, could put Nvidia in a leadership position within a market that could be worth more than $600 billion.

Gartner, the management consultancy group, predicts so-called generative AI will account for around 10% of all data produced by the year 2025, up from just 1% in 2021. Analysts at KGI see this as adding between $5 billion and $6 billion to Nvidia's top-line revenue within the next three years.