Nvidia Stock Soars to Record High as Earnings, Forecasts Crush Expectations

(CTN News) – Nvidia (NVDA) released its second-quarter earnings report after the market closed on Wednesday, surpassing already high expectations and further fueling the momentum of the AI trend in the market.

The company posted an impressive revenue of $13.51 billion, marking a staggering 101% increase from the previous year. Adjusted earnings per share came in at $2.70, a remarkable 429% surge from last year.

According to Bloomberg data, these figures far exceeded analyst predictions, who had anticipated revenue of $11.04 billion and earnings per share of $2.07.

Nvidia’s guidance for the current quarter was also remarkable, with revenue projected to reach $16 billion, plus or minus 2%. This projection significantly outperformed Wall Street’s already ambitious forecast of $12.5 billion in revenue.

Following the earnings release, Nvidia’s stock surged by 9% in after-hours trading, reaching an all-time high of $515 per share.

This earnings report from Nvidia was particularly significant as it was seen as a litmus test for the ongoing AI hype cycle.

The company’s success in leveraging AI technology to drive its business forward has set it apart from others who have embraced AI but haven’t experienced the same transformative growth.

Nvidia’s CEO, Jensen Huang, expressed his confidence in the company’s direction by stating, “A new computing era has begun.” He noted that businesses worldwide are transitioning from general-purpose computing to accelerated computing and generative AI.

Regarding revenue by segment, Nvidia reported $10.3 billion in data center revenue and $2.5 billion in gaming revenues. These figures exceeded forecasts of $8 billion and $2.4 billion, respectively.

Additionally, the company unveiled plans for a $25 billion share repurchase program, aiming to buy back stock during the current fiscal year.

Investors had high expectations for Nvidia’s performance in this quarter, with the company’s prior statement indicating revenue in the range of $11 billion, plus or minus 2%.

Huang emphasized the advancements made during the quarter, including major cloud service providers adopting NVIDIA H100 AI infrastructures and partnerships with leading enterprise IT systems and software providers to bring AI to various industries. This signals a race to adopt generative AI technology.

Nvidia’s strong performance was felt across the AI-related stock market. Following the report, AI-related companies like C3.ai (AI), Palantir (PLTR), Marvell Technology (MRVL), and MongoDB (MDB) all experienced more than 3% gains in after-hours trading.

Notably, C3.ai and MongoDB had faced declines of around 10% in the past month before the report. Snowflake (SNOW), a software giant, also reported earnings that exceeded expectations, contributing to the positive sentiment in AI-related stocks.

The rapid increase in demand for Nvidia’s chips raised concerns among some on Wall Street regarding whether key supplier TSMC could keep up with the production of graphics processors to meet Nvidia’s customers’ needs.

Tesla (TSLA) CEO Elon Musk had praised Nvidia’s efforts and expressed eagerness to utilize their hardware as fast as it could be delivered.

The AI trend gained significant momentum in November 2022 with the introduction of OpenAI’s generative AI app, ChatGPT. While AI technology had existed for some time, the popularity and rapid growth of ChatGPT highlighted its potential, capturing the attention of Wall Street.

Since then, various tech giants, including Microsoft (MSFT), Google (GOOG, GOOGL), and Meta (META) have either launched or announced their own generative AI tools and software, reinforcing the increasing importance of AI technology in the market.