Nvidia beats forecasts with impressive results thanks to artificial intelligence | Companies

Rarely have company results been so eagerly awaited as they were this Wednesday. Maybe never. Nvidia is “the most important asset on planet Earth,” as defined by Goldman Sachs, perhaps the most powerful firm on planet Wall Street. Nvidia’s reports were seen as a thermometer of the strength of its artificial intelligence business. On Wednesday, the microprocessor giant reported impressive results that exceeded market expectations and also issued ambitious forecasts that exceed forecasts, pardon the tongue twister. Nvidia reacted to the stock market rally outside regular trading hours with a gain of about 6%.

The Santa Clara, California-based company saw its quarterly revenue increase 265% to $22.103 million (about €20.400 million at current exchange rates). Profits soared an impressive 769% to $12.285 million, a record for the company.

Following these quarterly reports, Nvdia’s revenue for the year as a whole rose 126% to $60.922 million, while earnings increased 581% to $29.760 million, according to SEC filings.

Nvidia hopes to continue to grow at a high rate. Revenue is expected to be approximately $24 billion, gross margin is expected to be 76.3%, and operating expenses are expected to be approximately $3.5 billion and $2.5 billion. These forecasts are more ambitious than the market expected. They represent a more than tripling of revenue of $7.192 million compared to the first quarter of last year and result in impressive earnings growth.

Nvidia is the winner of the artificial intelligence fever as it develops the most powerful microprocessors. Demand for its products has grown exponentially due to the high computing needs associated with generative artificial intelligence.

On the business side, revenue from its data center division, its strongest performer, hit a record $18.4 billion, up 27% from the previous quarter and up 409% from a year ago. Full-year revenue increased 217% to a record $47.5 billion. In the video game business, revenue in the second-best fourth quarter was $2.9 billion, unchanged from the previous quarter and up 56% from a year ago. Annual revenue rose 15% to $10.4 billion.

“Computing acceleration and generative artificial intelligence have reached an inflection point. Demand is growing globally, across companies, sectors and countries,” said Jensen Huang, founder and CEO of Nvidia, in a statement. “Our data center platform is driven by an increasingly diverse set of factors: demand for data processing, training and insights from major cloud providers and other GPU specialists, as well as consumer software and Internet companies. Vertical industries, led by automotive, financial services and healthcare, are already moving billions of dollars.

Financial television in the US, such as CNBC and Bloomberg TV, actively covered the release of these figures live. Conservative Fox Business, on the other hand, held a talk show at the market end praising Donald Trump and criticizing Joe Biden. The stock became the most traded stock on the US stock market, with many small investors betting on it. Expectations were so high that a puncture could have brought down the entire market, but investors applauded the published figures.

The scale of the impact that artificial intelligence will have on Nvidia’s accounts caught everyone by surprise less than a year ago when the company released forecasts that were off the charts. “In the more than 15 years that we’ve been doing this work, we’ve never seen guidance like the one Nvidia just presented, with Q2 outlook that was widely agreed to be astronomical and exceeding expectations. Bernstein analysts wrote in a report sent to clients.

At the time, the company said it expected revenue of about $11 billion in the second quarter, compared with the market estimate of less than $7,200. Nvidia shares accelerated their rise in the stock market. The company first entered the trillion-dollar club and then overtook other tech giants. It overtook Amazon and Alphabet to become the third-largest company by market capitalization before investors began to feel giddy.

Despite falling sessions this Monday and Tuesday on fears that earnings would disappoint, Nvidia shares have risen about 225% over the past 12 months (not counting its reaction to the results), to around $675 per game, giving the company a value approaching $1.7 billion. The company ended the 2023-2024 fiscal year with $26 billion in cash.

The magic around value is so great that Nvidia only had to tell the US Securities and Exchange Commission (SEC) that it had small stakes in other modest tech companies to send them skyrocketing in the stock market. This is despite the fact that in the past he has already disclosed investments that at that time went almost unnoticed.

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