June 25, 2024

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Nvidia stock rises 7% to $1,000 after earnings beat expectations, announces stock split and dividend increase

Nvidia stock rises 7% to $1,000 after earnings beat expectations, announces stock split and dividend increase

Nvidia (NVDA) reported first-quarter earnings after the bell on Wednesday that beat expectations while also announcing a 10-for-1 stock split and a dividend increase, after some of its Big Tech peers handed out larger quarterly payouts to shareholders.

The company reported adjusted earnings per share (EPS) of $6.12 on revenue of $26 billion, an increase of 461% and 262%, respectively, from last year.

Analysts had expected adjusted earnings per share of $5.65 on revenue of $24.69 billion, according to data from Bloomberg. The company reported adjusted EPS of $1.09 on revenue of $7.19 billion in the same quarter last year.

In the current quarter, Nvidia expects its revenue to be $28 billion, plus or minus 2%. This is better than the $26.6 billion analysts expected.

Nvidia stock rose nearly 7% to trade above $1,000 in premarket trading Thursday.

“Our data center growth was driven by strong and accelerating demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang said in a statement. “Beyond cloud service providers, generative AI has expanded to include consumer internet companies, enterprises, sovereign AI customers, automotive, and healthcare, creating multiple multi-billion dollar vertical markets.”

Wall Street analysts have previously raised concerns about the share of Nvidia’s data center revenue coming from high-tech companies like Microsoft (MSFT), Google (GOOG, GOOGL), Amazon (AMZN), and other big tech names. This is especially true as these companies roll out their own AI accelerator chips.

However, while the non-excessive use of Nvidia chips is increasing, CFO Colette Kress She said in her own comment Large cloud providers account for about 45% of the company’s data center revenue.

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Nvidia’s data center revenue jumped 427% year over year to $22.6 billion, representing 86% of the company’s total revenue for the quarter. But Chris noted that revenue from China declined significantly in the quarter, as the company was forced to halt shipments of its most powerful chips to the country. Furthermore, she said she expects the market in the region to remain very competitive in the future.

Nvidia’s gaming segment, once its most important business, saw revenue of $2.6 billion.

The company’s stock split — where shareholders will receive 10 shares for every share they currently own in the company — will be effective on June 7, and its new dividend will be paid on June 28 to shareholders effective June 11.

The stock split is likely to heighten speculation that Nvidia could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining Big Tech peers like Apple (AAPL), Amazon and Microsoft. Nvidia stock traded near $980 per share in after-hours trading on Wednesday, meaning the stock is expected to trade at $98 after the split.

Nvidia’s boosted dividend also follows similar moves announced so far this year from the likes of Meta (META) and Alphabet, which initiated a quarterly dividend for the first time, and Apple, which raised its dividend earlier this month.

NVIDIA CEO Jensen Huang shows products on stage during the annual Nvidia GTC artificial intelligence conference at the SAP Center in San Jose, California, on March 18, 2024. (Photo by Josh Edelson/AFP) (Photo by Josh Edelson/AFP via Getty Images)

NVIDIA CEO Jensen Huang presents products on stage during the annual Nvidia GTC artificial intelligence conference at the SAP Center in San Jose, California, on March 18, 2024. (JOSH EDELSON/AFP via Getty Images) (Josh Edelson via Getty Images)

Email Daniel Hawley at [email protected]. Follow him on Twitter at @Daniel Holly.

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