Macro

Nvidia's 7% Surge Boosts AI Stocks, Market Value Tops $1 Trillion

Nvidia's Q1 revenue hits $26B, net income soars sevenfold to $5.98B, stock surges 7% postmarket.

By Bill Bullington

5/22, 23:14 EDT
S&P 500
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Advanced Micro Devices, Inc.
Broadcom Inc.
Dell Technologies Inc.
Marvell Technology, Inc.
NVIDIA Corporation
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Key Takeaway

  • Nvidia's strong earnings and forecast boosted its stock by over 7%, signaling continued growth in AI computing stocks.
  • Nvidia's postmarket gain pushed its stock above $1,000, adding more than $100 billion in market value for 2024.
  • The announcement of a 10-for-1 stock split aims to make shares more accessible, potentially driving further retail investor interest.

Nvidia's Earnings Surge

Nvidia Corp. has once again demonstrated its dominance in the artificial intelligence (AI) sector, reporting another quarter of estimate-beating earnings. The chipmaker's shares surged over 7% in postmarket trading, driven by robust demand for its AI computing products. Nvidia's revenue for the three months ending in April reached $26 billion, surpassing its February estimate of $24 billion and tripling sales from a year earlier for the third consecutive quarter. Net income soared sevenfold to $5.98 billion. The company also projected revenue of $28 billion for the current quarter, exceeding Wall Street's expectations of $26.8 billion.

"We are poised for our next wave of growth," said Jensen Huang, Nvidia's Chief Executive Officer. This optimism is further supported by the company's announcement of a 10-for-1 stock split, aimed at making shares more accessible to employees and investors. The stock split, Nvidia's second in three years, has already driven the stock above $1,000 for the first time, potentially adding over $100 billion to its market value and pushing its 2024 rise above 100%.

AI Boom Fuels Market Rally

Nvidia's stellar performance has had a ripple effect across the semiconductor industry, particularly among its suppliers and partners. In Asia, shares of companies like South Korea's SK Hynix Inc. and Taiwan Semiconductor Manufacturing Co. saw gains of 3.2% and 1.5%, respectively. Japan's Advantest Corp. rose 5.2%, contributing to the Bloomberg Asia Pacific Semiconductors Index reaching its highest level in over three years.

In the U.S., Nvidia's results spurred a rally in hardware stocks during after-hours trading. Server makers Super Micro Computer Inc. and Dell Technologies Inc. climbed more than 4%, while chipmakers Broadcom Inc., Marvell Technology Inc., and Advanced Micro Devices Inc. also saw gains. "We’re in a technology revolution and still in the early days of it," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder. "It is really hard to not be positive right now, especially on Nvidia."

Expanding AI Horizons

Nvidia's success is not just limited to cloud computing providers. The company is expanding its AI computing capabilities to other industries such as automotive and healthcare. "This is the beginning of a new industrial revolution," Huang said, emphasizing the broadening scope of AI applications. Nvidia's flagship processor, the H100, has seen feverish demand, particularly for AI chatbots like OpenAI's ChatGPT. These high-end processors, priced between $15,000 and $40,000 each, have become essential for developing cutting-edge AI tools.

The company is also preparing for the launch of its next-generation chip, code-named Blackwell, expected to debut in the fall. Analysts are optimistic about the new chip's potential, although some caution that customers might delay purchases of the current H100 model in anticipation of Blackwell. Despite this, Nvidia's latest results show no signs of a slowdown in demand.

Street Views

  • Tim Ghriskey, Ingalls & Snyder (Bullish on Nvidia):

    "We’re in a technology revolution and still in the early days of it. It is really hard to not be positive right now, especially on Nvidia."

  • Alec Young, Mapsignals (Bullish on Nvidia):

    "The split is huge news. You shouldn’t underestimate the appeal of stocks that are retail favorites."

  • Michael Sansoterra, Silvant Capital Management (Bullish on AI market):

    "It says not only is the data-center spend strong for AI, but it also says that the folks working around the periphery will probably continue to do well as well. That bodes well for the health of the AI market, which is still in its early stages."

Management Quotes

  • Jensen Huang, CEO of Nvidia:

    "Demand for generative AI computing is expanding beyond cloud computing providers to other industries like automotive and health care."