NVIDIA easily surpassed expectations for Q1 and has raised guidance hugely for Q2 today.
AI lies behind fresh surge in demand and the company is on its way to becoming first chip maker to have $1 trillion market cap.
“Last year’s share price slump after a profit warning, a slowdown in demand for graphics card sales and a surge in inventory all seem like a distant memory after NVIDIA’s better-than-expected first-quarter results and huge upgrade to second-quarter revenue and profit forecasts,” says AJ Bell investment director Russ Mould. “The shares shot up by a quarter in after-hours trading to leave the stock on the cusp of becoming the first silicon chip specialist to have a $1 trillion market cap, as chief executive Jensen Huang identified artificial intelligence (AI) as a key driver of increased demand.
“Full-year sales and earnings fell in 2022 and Mr Huang’s guidance for Q1 of the new fiscal year had been cautious back in February, but NVIDIA simply breezed past analysts’ forecasts. Sales fell year-on-year, but by a lot less than expected, and net profit actually rose both quarter-on-quarter and year-on-year.
“First-quarter sales came in at $7.2 billion, compared to forecasts of $6.5 billion and the prior period’s $6.1 billion, to give investors grounds for believing that mid-2022’s stumble was just a blip. Net income reached $2.0 billion, against consensus forecasts of $1.5 billion, and the prior quarter’s $1.4 billion. Net profit even advanced from Q1 2022’s $1.6 billion.
“Bulls of the stock could also draw encouragement from how inventory dropped by $500 million to $4.6 billion.”
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