Nvidia’s Earnings Sent One Clear Message: The AI Boom Is Just Getting Going

Nvidia’s earnings sent one clear message: the artificial-intelligence boom isn’t anywhere close to being finished. The chip maker remains at the heart of a wave of massive spending on AI infrastructure and in no mood to be displaced.

Nvidia shares rose 6.1% to $1,007.00 — a record high — in after-hours trading on Wednesday after its earnings report.

Nvidia’s first-quarter revenue of $26.0 billion and earnings of $6.12 a share easily beat the consensus forecasts from analysts, but they also beat the “whisper numbers”—unofficial estimates by analysts that are communicated to some clients—which had set an even higher bar.

“While revenue outperformance and outlook met expectations for “whispers” you can’t help feeling Nvidia left a lot of gas in their tank to beat and raise from here,” wrote Melius Research analyst Ben Reitzes in a research note.

Reitzes raised his target price on Nvidia to $1,250 from $1,125 previously and kept a Buy rating on the stock.

The main concern heading into the earnings report was that customers might slow their orders for Nvidia’s current chips while waiting for shipments of its new Blackwell range to start later this year. CEO Jensen Huang dismissed the worry, saying there was increasing demand for the current generation of Hopper chips.

Huang also brushed off fears that custom chips from the likes of Microsoft, Amazon.com and Meta Platforms would eat into the market for Nvidia’s hardware, pointing to a lower total cost of ownership, or the cost of using its chips when taking into account indirect factors such as power and cooling demands.

“We believe Nvidia can comfortably defend and maintain its market share. Big Tech’s capital expenditure remains exceptionally high given how early we are in the generative AI investment cycle. Despite efforts to explore alternative or in-house chips, their options are limited by supply constraints and the challenge of surpassing Nvidia’s proven performance,” wrote Ido Caspi, a research analyst at exchange-traded fund provider Global X.

If there was any note of concern about rivals, it came in respect to China where Huang said the market had become more competitive due to the limitations on what chips Nvidia could export to the country.

Nvidia also gave a crowd-pleasing flourish when it said it would split its stock 10-for-1, effective June 7. While stock splits don’t create any inherent new value, they allow investors with smaller budgets to buy whole shares rather than fractional amounts.

The optimism around Nvidia looked set to spread across a variety of stocks involved in providing AI infrastructure. Dell Technologies rose more than 5% in after-hours trading, while server manufacturer Super Micro Computer gained 4.2% and memory-chip maker Micron Technology rose 2.4%.

Write to Adam Clark at [email protected]