After blowout quarter, Nvidia (NVDA) looks set to continue riding the AI wave

Shares of NVIDIA Corporation (NASDAQ: NVDA) rallied this week after the semiconductor giant reported robust first-quarter numbers. Being a first mover in artificial intelligence chips, the company is spearheading the widespread shift from traditional data centers to accelerated computing.

The stock crossed the $1,000 mark for the first time on Wednesday evening. The market was impressed by the four-fold growth in Q1 Data Center revenues and the management’s bullish guidance. The positive investor sentiment also reflects the company’s assurance that its AI chips will enable customers to reduce operating costs and generate high returns on their investments.

Impressive Results

In the April quarter, the Santa Clara-based GPU behemoth’s top line climbed to $26.04 billion from $7.19 billion last year, aided by a strong performance by the Data Center and Gaming segments which together account for about 96% of the total – Data Center revenue rose 400% year-over-year while Gaming revenue advanced 18%. As a result, adjusted earnings surged to $6.12 per share in Q1 from $1.09 per share a year earlier. Unadjusted net income was $14.88 billion or $5.98 per share in the first quarter, compared to $2.04 billion or $0.82 per share in the same period of 2024.

Meanwhile, the company announced a 10-for-1 stock split with June 10 as the first day of trading on a split-adjusted basis, which aims to make the stock accessible to more retail investors. The management expects second-quarter revenue to be approximately $28 billion and sees sequential growth in all market platforms. Reported and adjusted gross margins are expected to be 74.8% and 75.5% respectively in Q2, plus or minus 50 basis points, which is in line with the earlier forecast.

Nvidia’s CEO Jensen Huang said at the Q1 earnings call, “The next industrial revolution has begun. Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost and energy-efficient while expanding revenue opportunities. CSPs were the first generative AI movers. With NVIDIA, CSPs accelerated workloads to save money and power.”

A major chunk of the company’s data center revenue comes from leading cloud providers, including Amazon, Microsoft, Oracle, and Google, as they deploy NVIDIA AI infrastructure at scale. Large language model companies like OpenAI, DeepMind, and Meta are building on Nvidia AI on the cloud. Considering the growing demand for Nvidia’s products in areas like autonomous driving, the management expects automotive to be its biggest enterprise vertical within the Data Center segment this year.

Updates

The company said it is on track to make available its next-generation AI factory platform Blackwell later this year, which is earlier than initially expected. While the tech firm continues to experience a slowdown in China due to recent export restrictions, to tackle the issue it has developed new products designed specifically for China that don’t require export control license.

Extending the post-earning rally, NVDA traded up 10% in the early hours of Thursday’s session. The company’s market cap has reached around $2.56 trillion.