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Nvidia Shares Soar 9%, Hit $1,000 After Earnings Beat Forecasts, It Announces Stock Split, Dividend Hike
Nvidia (NVDA) shares rose as much as 9% on Thursday, trading above $1,000 in early trading and giving the chip giant a market capitalization above $2.5 trillion following its first quarter earnings once again destroyed the predictions.
Nvidia’s first-quarter results, released after the close on Wednesday, showed that adjusted earnings per share (EPS) registered $6.12 on revenue of $26 billion, a jump of 461% and 262%, respectively, in relation to the previous year.
The company also announced a 10-for-1 stock split and dividend increase, following some of its Big Tech peers in distributing heftier quarterly payments to shareholders.
Analysts were expecting adjusted earnings per share of $5.65 and revenue of $24.69 billion, according to Bloomberg data. The company reported adjusted earnings per share of $1.09 on revenue of $7.19 billion in the same quarter last year. In the current quarter, Nvidia expects revenue of $28 billion, plus or minus 2%. That’s better than the $26.6 billion expected by analysts.
“Our data center growth was driven by strong and accelerating demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang said in a statement. , sovereign AI, automotive and healthcare customers, creating multiple multi-billion dollar vertical markets.”
Wall Street analysts have already raised concerns about the portion of Nvidia’s data center revenue that comes from hyperscalers like Microsoft (MSFT), Google (GOOG, Google), Amazon (AMZN) and other Big Tech names. This is especially true when these companies launch their own AI accelerator chips.
In an exclusive interview with Yahoo Finance following the company’s earnings report on WednesdayHuang dismissed concerns that the company could face a lull in demand as it shifts between its current and next generation of AI chips.
“People want to deploy these data centers right now,” Huang said. “They want to put our [graphics processing units] work now and start earning money and saving money. And so that demand is very strong.”
Nvidia’s data center revenue increased 427% year over year to $22.6 billion, representing 86% of the company’s total revenue for the quarter. Nvidia’s gaming segment, which was previously its most important business, reported revenue of $2.6 billion. Chief Financial Officer Colette Kress said in a statement on Wednesday that large cloud providers accounted for about 45% of the company’s data center revenue.
On the company’s earnings call, Kress highlighted that revenue from China fell significantly in the quarter as the company was forced to halt shipments of its most powerful chips to the country. The company also expects the region’s market to remain very competitive in the future.
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The company’s stock split – in which shareholders will receive 10 shares for every share of the company they currently own – will take effect on June 7, and its new dividend will be paid on June 28 to shareholders starting June 11.
The stock split will likely fuel speculation that Nvidia could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining Big Tech peers like Apple (AAPL), Amazon and Microsoft. Nvidia shares were trading near $980 per share in trading on Wednesday, meaning the shares were expected to trade at $98 after the split.
Nvidia’s beefed-up dividend also follows similar moves announced so far this year names like Meta (GOAL) and Alphabet, which started quarterly dividends for the first time, and Apple, which raised its dividend earlier this month.
NVIDIA CEO Jensen Huang displays products on stage during the Nvidia GTC Annual Artificial Intelligence Conference at the SAP Center in San Jose, California, March 18, 2024. (JOSH EDELSON/AFP via Getty Images) (JOSH EDELSON via Getty Images)
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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