United Kingdom
Argentina 
Australia 
Austria 
Brazil 
Canada 
Germany 
Ireland 
Italy 
Malaysia 
Mexico 
New Zealand 
Poland 
South Africa 
United States Nvidia predicts further revenue surges
- Earnings beat expectations again
- Share price rises 6 per cent in after-hours trading
Demand for Nvidia’s (US:NVDA) AI chips continues to outstrip supply as its quarterly results smashed broker expectations again. Meanwhile, its new bundled artificial intelligence (AI) product, called Blackwell, is just being launched and will start contributing “a lot” of revenue in the second half of the year.
In the three months to April, Nvidia’s revenue rose 262 per cent year on year to $26bn (£20.5bn), ahead of the $24.6bn expected by FactSet broker consensus. Gross margin also expanded by 13.8 percentage points to 78.4 per cent, which helped drive earnings per share up 461 per cent to $6.12, comfortably beating the $5.60 forecast.
As expected, most of this growth came from the AI data centre business, which saw revenue grow 427 per cent year on year to $22.6bn. This was split between the compute division, which makes up 86 per cent of the data centre business, and networking.
Networking revenue declined quarter on quarter. Chief financial officer Colette Kress eased concerns by saying this was an issue with supply rather than demand dropping. She expects networking to return to sequential growth in Q2. However, as Investors’ Chronicle reported this week, it is facing increased competition in this sector.
The next driver of growth is coming from Nvidia’s new product Blackwell which is now in full production.
Chief executive Jensen Huang said demand is outstripping supply and he expects “a lot” of revenue from Blackwell this year. “Nvidia could grow faster than we previously thought as Blackwell, networking, software and sovereign areas become bigger contributors,” said Melius Research analyst Ben Reitzes.
Blackwell is a “platform not a GPU”, Huang said, which means that, as well as the graphics processing unit (GPU), it also includes the memory chips, air cooling, networking cables and all the other hardware required for the AI computer. It is then backwards compatible, so Nvidia’s software stack works across both its old and new chips. The upside of bundling all this together is that it traps customers into the Nvidia ecosystem, making it harder for competitors.
The share price rose 6 per cent in after-hours trading, meaning Nvidia is trading on a forward price/earnings ratio of 36. This is expensive, but if the company can maintain its near monopoly position in AI computing, it won’t appear costly for long.
