Nvidia Earnings: Another Record Quarter For AI Leader

8 hours ago

Forbes

Topline

Nvidia’s hotly anticipated earnings report exceeded consensus expectations, as the world’s biggest company continued its streak of delivering explosive financial growth as the clearest beneficiary of the artificial intelligence gold rush, though its stock still slipped following the report.

Nvidia's centibillionaire CEO Jensen Huang speaks at a 2023 conference.

AFP via Getty Images Key Facts

Nvidia reported $0.81 adjusted earnings per share, or $19.3 billion net income, in the three-month period ending last month, topping average analyst projections of $0.75 EPS, or $17.4 billion net income, according to FactSet.

The semiconductor chip architect generated $35.1 billion in sales, crushing estimates of $33.2 billion.

Nvidia indicated growth will continue in the fourth quarter, guiding for about $37.5 billion in revenue, compared to consensus forecasts of $37.09 billion.

Why Is Nvidia Stock Down?

Despite the top and bottom line beats and improved outlook, shares of Nvidia slipped as much as 3% in limited afternoon trading within 20 minutes of the release. The cause of the decline was not immediately clear, but it’s a reflection of the sky-high expectations for the AI colossus. The 7% quarter-over-quarter growth implied by the $37.5 billion Q4 sales guidance would be the weakest such result since the quarter ending in January 2023 for Nvidia. The stock trimmed losses to less than 2% following the start of the company’s 5 p.m. EST earnings call as Collette Kress, Nvidia’s chief financial officer, touted “staggering” demand for the company’s newest graphics processing unit platform, Blackwell.

Big Number

Nearly $100 billion. That was the market capitalization loss implied by Nvidia stock’s initial post-earnings drop. That loss following a strong beat-and-raise roughly equates to the total market value of legacy Silicon Valley titan Intel.

Surprising Fact

Nvidia’s sales in its AI-heavy datacenter segment were more than 700% higherthan they were in 2022’s comparable period, growing from $3.8 billion to $30.8 billion. That exponential growth coincides with the generative AI boom, as Nvidia designs a majority of the complex software and hardware systems used to train the advanced machine learning models.

What To Watch For

How Nvidia’s results impact the broader market this week. Bank of America strategists wrote earlier this week Nvidia earnings “can dictate the near-term direction of the market,” with S&P 500 options activity linked to the announcement pricing in more potential movement for the index than for weighty economic reports like the consumer price index or the Federal Reserve’s interest rate decision.

Key Background

With a market capitalization of $3.5 trillion, Nvidia is the most valuable company in the world, outstripping the likes of longer established stalwarts like Apple and Microsoft. Nvidia has become a Wall Street darling, with its share price up more than 830% over the past two years, providing more than twice the return on investment as the next closest company listed on the S&P for the entirety of the timeframe, Facebook parent Meta at 400%. The 31-year-old Nvidia traces its history back to humble origins, with its three cofounders coming up with the idea of the company at a booth of a Denny’s diner in Silicon Valley. One of those cofounders, Jensen Huang, a former Denny’s busboy and Nvidia’s chief executive since that fateful day, is now one of the 10 richest people in the world, with a $127 billion net worth, according to Forbes’ estimates.