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Nvidia forecasts quarterly revenue above estimates, announces stock split

Published 2024-05-22, 04:46 p/m
© Reuters. FILE PHOTO: A view of a Nvidia logo at their headquarters in Taipei, Taiwan May 31, 2023. REUTERS/Ann Wang/File Photo

By Arsheeya Bajwa and Stephen Nellis

(Reuters) -Nvidia forecast second-quarter revenue above estimates on Wednesday and announced a ten-for-one forward stock split, impressing investors who have already tripled the chipmaker's market value in the past year on AI optimism.

Shares of the Santa Clara, California-based company climbed 4% after the bell. The AI poster child's stock has risen more than 90% so far this year.

Demand for Nvidia (NASDAQ:NVDA)'s chips stands unparalleled as enterprises spend billions to procure advanced semiconductors to power data centers capable of processing complex AI tasks.

Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and other technology companies have competed for a limited supply of Nvidia's high-end chips as they race to dominate AI computing.

Nvidia's contract chipmaker, Taiwan Semiconductor Manufacturing, has also been working to increase its advanced packaging capacity, a key supply chain constraint for the processors.

The Taiwanese company said in April it expects to more than double its advanced packaging capacity this year.

The company forecast second-quarter revenue of $28 billion, plus or minus 2%. Analysts on average were expecting revenue of $26.66 billion, according to LSEG data. 

Nvidia reported first-quarter revenue of $26.04 billion, beating estimates of $24.65 billion.

Dominating more than 80% of the market for AI chips, Nvidia stands in a unique position as both the largest enabler as well as beneficiary of surging AI development.

Sales at the data center segment, its largest by revenue, grew 427% to $22.6 billion in the first quarter ended April 28, coming in above estimates of $21.320 billion, according to data from FactSet.

Among Nvidia's customers is Meta Platforms (NASDAQ:META), which last month increased the midpoint of its 2024 capital expenditure forecast by about $4 billion.

While most so-called hyperscalers are also developing their own custom AI chips, analysts do not expect these to eat away at Nvidia's market share.

Nvidia expects second-quarter adjusted gross margin to be 75.5%, plus or minus 50 basis points. Analysts on average forecast gross margin to be 75.8%.

© Reuters. FILE PHOTO: A view of a Nvidia logo at their headquarters in Taipei, Taiwan May 31, 2023. REUTERS/Ann Wang/File Photo

Nvidia reported first-quarter adjusted gross margin of 78.9% compared with estimates of 77%. Aspiring competitor Advanced Micro Devices (NASDAQ:AMD) had recorded an adjusted margin of 52% in its fiscal first quarter.

Excluding items, the company earned $6.12 per share in the first quarter, beating estimates of $5.59.

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