NVIDIA Q1 2024 Earnings: AI Demand Fuels Growth Leading to Stock Split

NVIDIA's Q1 2024 financial results were announced on March 22, 2024. Jensen Huang, CEO and President of NVIDIA, spoke to investors, stating that "the next industrial revolution has begun,” when referring to the rapid increase in demand for AI infrastructure. Here's what investors can take away from the call, including details on the announcement of a 10:1 stock split and increasing dividends.

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Financial performance: New records broken

NVIDIA reported a record revenue of $26 billion in Q1 2024, marking an 18% increase quarter over quarter and 262% year over year. This performance was largely driven by strong demand for their NVIDIA Hopper GPU platform across data centers, cloud providers and enterprise customers. GAAP gross margin came in at 78.4%, up 2.4 points quarter over quarter. 

AI Demand Fuels Record Revenue

Data center revenue reached $22.6 billion, making for a 23% increase from Q4 2023 and 427% year-over-year growth. This segment’s success is attributed to the widespread adoption of NVIDIA’s technology in AI and high-performance computing applications. For LLMs, the main customers included OpenAI, Meta, Anthropic, XAI, Mistral and more. Several main customers of NVIDIA's upcoming Blackwell chip were noted during theearnings call including Amazon, Google, Meta, Microsoft, OpenAI, Tesla and Oracle.

NVIDIA expects the largest enterprise verticals to be in automotive this year, with opportunities in consumer internet companies as well. Demand from international governments is also expected to increase to the single digit billions of revenue in the upcoming year.

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Gaming Revenue Decline

While the overall financial performance was stellar, NVIDIA’s gaming revenue experienced a decline, accounting for just a tenth of overall revenue. This is a significant change from previous years, where gaming revenue represented a much larger portion of the company’s total sales.

Stock Price Market Capitalization

Following the earnings report, NVIDIA’s stock price crossed the $1,000 threshold for the first time in after-hours trading, rising from a $949.50 close before the call on May 22, 2024. The stock reached over $1,050 in the day following the call. On this day, NVIDIA took the spot as the third most valuable company in the world with a market capitalization over $2.5 trillion.

Stock Split Announced

NVIDIA announced a 10-for-1 stock split on the Q1earnings call This split aims to make stock ownership more accessible to employees and investors. This will be the sixth stock split in NVIDIA's history.

The split will take effect after the market closes on June 7, 2024. Each shareholder of record as of June 6, 2024, will receive nine additional shares of stock for each share they own after the market close on June 7, 2024. The stock will then begin trading on a split-adjusted basis at the market open on June 10, 2024.

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Dividend Increase

In addition to the stock split, NVIDIA also announced it is raising its quarterly cash dividend by 150% from $0.04 per share to $0.10 per share on a post-split basis.

Supply Chain Challenges and International Sales

NVIDIA noted supply chain challenges and the impact of U.S. restrictions on chip exports to China. However, the company expressed optimism about its ability to navigate these challenges and continue serving its customers globally. Both Blackwell chips and H200s are said to both be supply-constrained for the foreseeable future.

Upcoming Products

NVIDIA announced the Spectrum-X Ethernet networking solution designed specifically for AI applications. Deliveries for Blackwell chips are expected to begin in Q2 2024. The first H200 GPUs were delivered to OpenAI this quarter, with more deliveries expected in Q2.

What's Ahead

The NVIDIA annual shareholder’s meeting is scheduled for June 26, 2024 at 9am CT. Investors may be able to vote their shares by proxy through their brokerage. You can access the annual shareholder’s meeting and as well as a recording of the quarterly results at NVIDIA's investor relations page.

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