Nvidia Stock Surges As Generative AI Frenzy Boosts Sales
Most of Nvidia’s growth in the first quarter came from its data center business due to a generative AI spending frenzy kicked off by ChatGPT last year that put the company’s GPUs in high demand.
Nvidia expects revenue in the second quarter to surge due to a “steep increase in demand related to generative AI and large language models” that has already led to record sales for the vendor’s data center business.
The Santa Clara, Calif.-based chip designer dropped the news Wednesday in the earnings report for the first quarter of its 2024 fiscal year. Investors were elated by the results, sending the company’s stock price up more than 23 percent in after-hours trading.
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“Companies are now racing to deploy accelerated computing for the generative AI era,” Nvidia CEO Jensen Huang said on the company’s earnings call.
During the first quarter, which ended April 30, Nvidia accelerated its recovery from a slowdown in the market last year with $7.2 billion in revenue, down 13 percent from the same period last year but 19 percent higher from the previous period.
Nvidia’s first-quarter revenue beat Wall Street’s expectations by $670 million while its earnings per share of $1.09 exceeded analyst estimates by 17 cents.
Most of last quarter’s growth came from Nvidia’s data center business due to a generative AI spending frenzy kicked off by ChatGPT last year that put the company’s GPUs in high demand, according to Nvidia CFO Colette Kress.
Nvidia expects generative AI-driven demand to intensify in the second quarter. Kress said the company estimates revenue will reach $11 billion in the period, which would amount to a 64 percent increase from the same period last year.
“We expect this sequential growth to largely be driven by data center, reflecting a steep increase in demand related to generative AI and large language models,” she said. “This demand has extended our data center visibility out a few quarters, and we have procured substantially higher supply for the second half of the year.”
Nvidia First-Quarter Revenue Breakdown
Nvidia’s data center revenue in the first quarter was $4.3 billion, up 14 percent year-over-year and up 18 percent from the previous period. This marked a record from the company, largely driven by demand for generative AI applications. Large consumer internet companies and cloud service providers also contributed.
The company’s gaming revenue was $2.3 billion. That marked a 38 percent year-over-year decrease, which the firm said reflected “weaker demand due to the macroeconomic slowdown and lower shipments to normalize channel inventory levels.” But sales were up 22 percent from the previous quarter, driven by sales of the company’s expanding lineup of GeForce RTX 40 Series GPUs.
Nvidia’s professional visualization business was $295 million, a 53 percent decline year-over-year but up 31 percent from the previous period. The company said while it had sold fewer GPUs to partners to lower inventory levels, it enjoyed a recent bump in sales due to higher demand for workstation GPUs.
The chip designer’s automotive revenue grew 114 percent to $296 million from the same period last year and 1 percent from the previous period. The year-on-year increase was attributed to growing sales for Nvidia’s self-driving platforms and AI cockpit solutions.
OEM and other revenue was $77 million, down 51 percent year-over-year and down 8 percent from the previous quarter due to lower entry-level notebook GPU sales.