Nvidia reported first-quarter earnings that beat Wall Street estimates, driving its stock up more than 25% in extended trading. The company said it is boosting supply to meet surging demand for its chips, used to power artificial intelligence services such as ChatGPT.
The chipmaker is at the center of AI boom thanks to its high-powered graphics cards and software. The stock has more than doubled this year while rival Advanced Micro Devices
Revenue came at $7.19 billion, higher than $6.5 billion expected but down 13% year-over-year. from $8.3 billion. Net income was $2.7 billion, trouncing expectations of $2.2 billion and slightly below $2.8 billion in Q1 last year. Adjusted earnings per share of $1.09 beat the 92 cent consensus, according to Bloomberg. The declines represented the sharp drop in demand for chips used in cryptocurrency mining after the Ethereum
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In Q2, the company expects $11 billion in sales, plus or minus 2%, on increased demand for its data-center family of products including H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU, sparked by the artificial intelligence boom. Nvidia CEO Jensen Huang said the company was seeing “surging demand” for these products and is “significantly increasing” supply.
First-quarter revenue for the data center segment was a record $4.28 billion, up 14% from a year ago . The professional visualization segment, which includes Omniverse Cloud, a service running in Microsoft Azure for the development and deployment of industrial metaverse applications, posted $295 million in sales, down 53% from a year ago.
“I think in AI Nvidia has created a significant moat,” wrote Matt Bryson, senior vice president of equity research at Wedbush, in a comment to Forbes . “Regarding the metaverse, I’m less clear on how that opportunity progresses. I think the Omniverse is interesting conceptually, but at this point any contribution is very modest compared to AI or even more specifically generative AI.
“With professional visualization, that market has been disrupted by inventory corrections (similar to what we’ve seen in a number of semi markets) and we are now seeing a recovery as inventories normalize. At the same time, that business is very tied to general enterprise IT spend and with companies generally tightening spend (and with a number of tech companies reducing employment), I think general economic conditions might slow the pace of that recovery,” he added.
Ahead of the report, KeyBank analyst John Vinh reiterated his overweight rating for the company’s stock and raised the price target to $375 from $320. The shares closed the regular session Wednesday at $305.38 and soared to $386.50 after hours.