San Jose, California – Nvidia saw a significant surge in its stock price, climbing 9.3% on Thursday and closing above $1,000 for the first time. This increase brought the chip giant’s market cap to over $2.5 trillion following outstanding first-quarter earnings that exceeded expectations.
In the first quarter, Nvidia reported adjusted earnings per share of $6.12 on revenue of $26 billion, marking a substantial increase of 461% and 262%, respectively, compared to the same period last year. The company also revealed plans for a 10-for-1 stock split and an increased dividend, aligning with a trend among other Big Tech companies to enhance shareholder value.
CEO Jensen Huang highlighted the strong demand for generative AI training and inference on the Hopper platform, fueling growth in the company’s data center segment. Nvidia expects revenue in the current quarter to reach $28 billion, surpassing analyst expectations.
Analysts have expressed concerns regarding Nvidia’s reliance on hyperscalers like Microsoft, Google, and Amazon for Data Center revenue, especially as these companies develop their own AI accelerator chips. However, Huang dismissed worries about a potential demand slowdown, emphasizing the immediate need for data centers to deploy Nvidia’s GPUs.
Nvidia’s Data Center revenue skyrocketed by 427% year over year to $22.6 billion, comprising 86% of the company’s total revenue for the quarter. This growth solidifies Nvidia’s position as a leader in the AI chip market, with JPMorgan analysts raising the stock price target and maintaining a positive outlook.
Despite challenges in the Chinese market due to chip shipment halts, Nvidia remains optimistic about future opportunities. The stock split, set to take effect on June 7, coupled with the increased dividend, has sparked speculation about the company’s potential inclusion in the Dow Jones Industrial Average alongside other tech giants.
Following the trend of Big Tech companies enhancing shareholder returns, Nvidia’s dividend increase reflects a strategic move to reward investors. The company’s proactive measures to drive growth and capitalize on emerging market trends position it for continued success in the evolving tech landscape.