Nvidia Corporation (NASDAQ: $NVDA) is an American multinational tech company that is a world leader in the manufacture of GPUs. Founded in 1993, the Santa Clara, CA-based company is driving advancements in gaming, AI, high-performance computing, robotics, and autonomous vehicles.
On Wednesday, after markets closed, Nvidia released its financial results for Q1 fiscal 2025 to a positive market reaction. It reported a surge in profits driven by the AI boom.
Nvidia Sales Soar in First Quarter
For the first quarter of fiscal 2025, Nvidia reported revenue of $26.04 billion, an 18% increase sequentially and an over 262% increase from last year, surpassing estimates of $24.65 billion. It reported a GAAP EPS of $5.98, a 21% increase sequentially, and a 629% Y/Y. The non-GAAP EPS came in at $6.12, up 19% sequentially and 461% Y/Y, beating non-GAAP estimates of $5.59.
On a GAAP basis, the gross margin came in at 78.4%, up 2.4 points Q/Q and 13.8 points compared to last year. Operating expenses increased 10% Q/Q and 39% Y/Y to $3.5 billion, while operating income soared 24% Q/Q and 690% Y/Y to $16.91 billion. The company reported a 628% surge in net income Y/Y and 21% Q/Q to $14.88 billion.
On a non-GAAP basis, gross margin soared 12.1 points to 78.9%, operating expenses rose 43% Y/Y to $2.5 billion, operating income soared 492% Y/Y to $18.06 billion, while net income rose 462% to $15.24 billion.
Segment Performance
Data Center, Nvidia’s main revenue source, brought in a record $22.6 billion in revenue in the first quarter, a 23% increase Q/Q and a 427% increase Y/Y. The Gaming and AI PC segment brought in $2.6 billion in revenue in the first quarter, an 8% Q/Q decline, and an 18% increase Y/Y.
The company’s Professional Visualization segment brought $427 million in revenue, an 8% Q/Q decline, and a 45% increase Y/Y, while its Automotive and Robotics segment brought in $329 million in revenue, a 17% Q/Q increase, and an 11% Y/Y increase.
Nvidia Issues Outlook
For the second quarter of fiscal 2025, Nvidia expects revenue of $28 billion, with a +-2% margin of error. It forecast a GAAP and non-GAAP gross margin of 74.8% and 75.5%, respectively, with a +-50 bps margin of error. For the whole year, it expects gross margins to be in the mid-70% range.
In the second quarter, GAAP and non-GAAP operating expenses are forecast to be around $4 billion and $2.8 billion, respectively, while full-year operating expenses are expected to grow by the low-40% range.
Stock Split and Dividend Increase
In the Q125 results, Nvidia announced a 10-for-one stock split for its common stock. The goal is to make the stock more accessible to investors and employees. It will be implemented on Friday, June 7, 2024, after markets close, with trading commencing on Monday, June 10, 2024. The split shares will be distributed to holders of NVDA stock as of the close of market on Thursday, June 6, 2024.
The tech giant also announced a 150% increase in its quarterly cash dividend from $0.04 to $0.10 per common stock, or $0.01 per share post-split. They will be distributed to holders of the stock as of Tuesday, June 11, 2024 on Friday, June 28, 2024.
Nvidia’s Net Income Surges on AI Boom
Over the past year, Nvidia has experienced a surge in sales as tech giants like Meta, Google, and Amazon have bought billions worth of Nvidia’s GPUs, a necessary component of advancing AI applications.
Durin the conference call, Nvidia CFO Colette Kress stated, “A big highlight this quarter was Meta’s announcement of Lama 3, their latest large language model which used 24,000 H100 GPUs.” She added that large cloud providers comprised of “mid-40%” of their data center revenue.
Nvidia (NVDA) Stock Performance
Following the over 600% profit explosion in its Q1 results, NVDA stock rose 9.19% a few minutes after the opening bell to $1,036.74 as of 10:17 AM EDT, surpassing the $1000 mark for the first time.
The stock has been rallying since the beginning of the AI boom and is up 97.12% YTD. Over the past 52 weeks, the stock has gained 209.40%, compared to the 28.02% gain of the SPX in the same period.
Analysts’ Outlook on NVDA
Thirty-seven stock analysts give NVDA stock an overall strong buy rating. They forecast a wide range for the stock in the next 12 months, with a high of $1,400 and a low of $850. Their average price target of $1,104.62 is a 16.34% upside as of Wednesday’s closing price.
Should You Add Nvidia To Your Portfolio?
Nvidia has emerged as the world leader in the development of AI chips, which has pushed its revenue to new heights. Additionally, the company is expected to begin the rollout of its latest Blackwell chips in the third quarter of 2024. Analysts forecast the B100 and B200 chips will be priced around 40% higher than their predecessors.
Despite the price increase, demand is expected to remain high. With the company currently controlling around 97% of the AI GPU market, some analysts believe its revenue could soar to $200 billion by next year. Based on these optimistic forecasts, NVDA could potentially be a great addition to your portfolio in 2024.
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