Equities

Nvidia’s Revenue Surges 262% to $26B, AI Chip Demand Soars

Nvidia's revenue surges 262% to $26B, driven by AI chip demand; projects $28B next quarter.

By Bill Bullington

5/23, 10:02 EDT
Amazon.com, Inc.
Alphabet Inc.
Meta Platforms, Inc.
Microsoft Corporation
NVIDIA Corporation
Tesla, Inc.
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Key Takeaway

  • Nvidia's revenue surged 262% to $26 billion, driven by AI chip demand, surpassing the $24.7 billion estimate.
  • Shares rose 2% in after-hours trading; Nvidia announced a 10-for-1 stock split and a 150% dividend increase.
  • Major tech firms like Google and Amazon drive demand; new Blackwell chip platform expected to boost future growth.

Revenue Surge

Nvidia reported a significant revenue increase of 262% for the past quarter, surpassing investor expectations and driving shares higher in after-hours trading on Wednesday. The company announced revenue of $26 billion for the three months ending in April, exceeding the consensus estimate of $24.7 billion. This growth was primarily driven by record sales of artificial intelligence (AI) chips. The year-on-year revenue increase mirrored the previous quarter's growth of 265%. For the current quarter, Nvidia projects revenue of approximately $28 billion, plus or minus 2%, compared to analysts' expectations of $26.8 billion.

Nvidia's shares, which have risen by more than 90% since the beginning of the year, increased by 2% in after-hours trading. The demand for Nvidia’s AI data center graphics processing units has surged as major tech companies like Google, Microsoft, Meta, and Amazon continue to invest heavily in AI infrastructure. Jensen Huang, Nvidia's CEO, emphasized the transformative impact of AI, stating, "This is the beginning of a new industrial revolution." The company's market valuation has soared to over $2.3 trillion, reflecting its dominant position in the AI sector.

Stock Split and Dividend Increase

In addition to its impressive revenue figures, Nvidia announced a 10-for-1 stock split effective from June 7 and a 150% increase in its quarterly cash dividend. The new dividend will be 10 cents per share. This move is expected to make Nvidia's shares more accessible to a broader range of investors and reflects the company's strong financial health.

The stock split and dividend increase come as Nvidia continues to benefit from the AI boom. The company's flagship AI accelerators, such as the H100 chips, have become essential for data centers developing advanced AI tools. These chips, which can sell for tens of thousands of dollars each, have contributed significantly to Nvidia's revenue growth. The company’s data-center division generated $22.6 billion in revenue last quarter, while gaming chips provided $2.6 billion, meeting analysts' expectations.

Expanding Market Reach

Nvidia is actively working to expand its market reach beyond its core customers, which include major tech giants like Amazon, Meta, Microsoft, and Google. These companies accounted for about 40% of Nvidia's sales last quarter. Jensen Huang highlighted the company's efforts to diversify its customer base by producing complete computers, software, and services aimed at helping more corporations and government agencies deploy AI systems.

The company’s new chip platform, Blackwell, is now in full production and is expected to drive significant revenue growth in 2024. Huang noted, "We are poised for our next wave of growth." Nvidia is also focusing on expanding its technology to consumer internet companies, carmakers, biotechnology, and healthcare sectors. The large-scale deployment of Nvidia chips by companies like Tesla, which uses them to develop self-driving vehicle software, exemplifies this expansion.

Despite the strong demand for its products, Nvidia faces challenges related to the increasing complexity of its technology and supply chain. Huang acknowledged these difficulties, stating, "Nobody has ever manufactured supercomputers at volume. We’re doing the best we can."