Chipmaker reports robust demand and surpasses revenue expectations, despite competitors investing in chip development
Nvidia announced record-breaking quarterly revenue on Wednesday, driven by the surge in corporate interest in artificial intelligence.
Jensen Huang, Nvidia’s founder and CEO, stated, “The next industrial revolution has begun—companies and countries are partnering with Nvidia… to produce a new commodity: artificial intelligence.”
The company achieved $26 billion in revenue in the first quarter of fiscal year 2025, marking an 18% increase from the previous quarter and a remarkable 262% increase from the same period a year ago. Net profit reached $14.88 billion, up significantly from $2 billion a year earlier.
The AI chip maker, considered a key indicator of the ongoing AI revolution, reported earnings per share of $5.98, a 21% increase from the previous quarter and a staggering 629% increase from the same period last year. According to CNBC, investors had anticipated revenue of $24.65 billion and earnings per share of $5.59. Additionally, the company revealed plans to split its stock, which is currently trading at $962, in a 10-for-one split on June 7.
Investors were expecting exceptional financial results and were particularly interested in seeing if the spending by major tech firms on Nvidia’s chips matched their expectations. It did.
“Once again, Nvidia impresses with its performance, as AI firms worldwide rely heavily on its chips, networking hardware, and software ecosystem,” stated eMarketer analyst Jacob Bourne.
He added that the public accolades from tech giants indicate Nvidia’s dominant position and their desire to lessen reliance on the company, though they acknowledge they are not yet in a position to do so completely.
Tech giants Amazon, Google, Meta, and Microsoft have all indicated plans to invest $200 billion this year in chips and data centers essential for training and operating their AI systems. Apple has announced its intention to unveil its AI strategy next month. Nvidia is considered the top provider of chips ideally suited for powering AI.
This year alone, the company has seen its value soar by more than $1.1 trillion. At the end of 2022, Nvidia was valued at $359 billion. Now, halfway through 2024, its value stands at $2.33 trillion, trailing only $500 billion behind Apple and $900 billion behind Microsoft, the two most valuable US-based companies.
Deutsche Bank strategist Henry Allen considers the chipmaker’s earnings announcement “one of the most significant events on the macro calendar.”
Analysts caution that no stock continues to rise indefinitely. Nvidia’s price-to-earnings (P/E) ratio is a substantial 79.95-to-one. In comparison, Microsoft stands at 36, and Apple at 29. However, Nvidia is also generating nearly $0.50 in bottom-line net income for every dollar in sales.
Could it meet demand? Nvidia’s chips are now so sought after that they’re delivered by armored vehicles. The stock dropped 5% on Tuesday after Amazon, a major customer, revealed to the Financial Times that it was awaiting orders for Nvidia’s new superchip, Blackwell.
There’s also the issue of China. Aligned with the Biden administration’s crackdown on Chinese-made electric vehicles, the company has been prohibited from selling its top-tier semiconductors in China.
Dan Ives of Wedbush Securities notes that investors will be eagerly listening to AI “godfather” Jensen after the results are announced. “The AI revolution begins with Nvidia, and in our opinion, the AI celebration is just commencing with the popcorn getting prepared,” he says.
