Chip designer NVIDIA Corporation soared immediately after its earnings report hit the wires, with its shares gaining more than 4.5% at 4:24 p.m. ET as its results saw revenue and earnings per share for the first quarter of fiscal 2025 exceed analyst estimates. NVIDIA reported $26 billion in revenue for the first quarter and topped it off with $6.12 in earnings per share - feats that allowed it to maintain triple digit growth for all major income statement items except for costs.
NVIDIA's profit during the quarter was in an entirely different league when compared to the year ago quarter's figure. It stood at $15.2 billion, more than five times the 2023 figure of $2.7 billion.
NVIDIA Posts 262% Revenue & 462% Profit Growth In First Quarter To Top Off AI Earnings Season
NVIDIA's CFO comments that accompany every earnings release started right off the bat by explaining that the meteoric Q1 2024 earnings growth had come due to the data center business division. Data Center has been NVIDIA's bread and butter for more than a year now, and the latest results cement its role as NVIDIA's primary market.
NVIDIA categorizes its Data Center earnings into two subsegments: Compute and Networking. Compute covers hardware products responsible for data crunching and application processing, and during Q1, its revenue accounted for roughly 86% of Data Center sales. NVIDIA raked in $22.5 billion in sales through Data Center, of which Compute made up $19.3 billion.
According to the firm's release, this growth came due to "higher shipments of the NVIDIA Hopper GPU computing platform used for training and inferencing with large language models, recommendation engines, and generative AI applications," which underpinned the strength of corporate upgrades to leading-edge computing products for artificial intelligence workloads.
NVIDIA's shares tamed back some of their jump as investors digested the report. They were up by 3% at 4:39 p.m. ET. The release saw Data Center account for more than 86% of NVIDIA's revenue - a figure that is wildly different from Q2 FY2023. Back then, NVIDIA had earned $2 billion through selling gaming GPUs and $3.8 billion through Data Center, allowing it to create a balanced income statement.
Gaming remained NVIDIA's second largest business division in Q1, with sales sitting at $2.6 billion. These marked an 18% annual growth, and according to NVIDIA, the jump came due to higher demand for gaming cards. The firm added that a slowdown in laptop demand dragged Gaming's annual growth.
NVIDIA's balance sheet items, namely inventory, provided an interesting picture. While inventory stood at $5.9 billion, $1.3 billion higher than the year ago $4.6 billion, NVIDIA's purchase obligations marked a hefty annual jump. In Q1 2024, NVIDIA's "[p]urchase commitments and obligations for inventory and manufacturing capacity" stood at $18.8 billion, for sharp growth over Q1 2023's "long-term supply and capacity obligations" of $7.27 billion. Due to limited leading edge global chip making capacity, NVIDIA must often ensure that it can rapidly scale up product shipments.
Another marked jump came in NVIDIA's multi year cloud service agreements, which stood at $8.8 billion, or nearly three times the year ago figure of $2.43 billion.
NVIDIA also announced a stock split, which will see each common stock shareholder receive nine additional shares at market close on June 6th, 2024. The rapid growth in earnings accompanied a 130% quarterly cash dividend growth. NVIDIA's quarterly cash dividend now sits at $0.10 per share, as the firm added that each common stock unit will pay a $0.01 dividend following the split.
For the current quarter, NVIDIA estimates that revenue will be $28 billion (beating $26.6 billion LSEG estimates) and grow at 172%—at levels similar to Q2 2023. The stock regained some of the earlier after market session gains close to the earnings call, with the shares up by 3.8% at 4.55 p.m. ET.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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