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Everything You Need to Know About NVIDIA’s Q1 Earnings Report

Artificial intelligence (AI) has certainly been top of mind recently. It seems like everyone is either talking about AI advancements, including myself, or joining in on the AI development race.

In fact, here is the latest AI news from this past week alone…

  • Meta Platforms, Inc. (META) introduced speech-to-text, text-to-speech AI models for over 1,100 languages for its Massively Multilingual Speech (MMS) project.
  • Fears about an AI-generated picture of the Pentagon on fire sent stocks tumbling for a few minutes on Monday.
  • Microsoft Corporation’s (MSFT) President Brad Smith voiced support for a regulatory agency for how the US government uses AI tools.
  • TikTok is testing an AI chatbot named Tako for “new ways to power search and discovery” on the popular app.
  • And OpenAI CEO Sam Altman said the company may consider leaving Europe if it finds the upcoming artificial intelligence regulations by the European Union to be overregulating.

The really big news this week, though, came from NVIDIA Corporation (NVDA).

The semiconductor chip company reported first-quarter earnings for fiscal year 2024 on Wednesday… and to put it plainly, folks, NVIDIA reported blowout earnings.

So, in today’s Market 360, we’ll review the company’s impressive earnings. But first let’s dive into NVIDIA’s successes in the AI world, as its AI success was key to its strong quarterly results.

A Leader in the AI Race

As longtime readers know, NVIDIA has long been a favorite stock of mine…

Remember that NVIDIA is a semiconductor that makes high-end graphics processing units (GPUs), used in products like gaming consoles and personal computers – and that chipmakers are vital to AI inventions…

So, it’s no surprise that NVIDIA’s GPUs have been in high demand… and are becoming even more so as the AI competition continues on.

For instance…

Last November, NVIDIA announced it is teaming up with Microsoft for a multi-year collaboration to build “one of the most powerful AI computers in the world.” Then in February, the companies announced a 10-year agreement to bring Xbox PC games – created and owned by Microsoft – to NVIDIA’s cloud gaming service, GeForce NOW.

Microsoft Gaming CEO Phil Spencer said, “This partnership will help grow NVIDIA’s catalog of titles to include games like Call of Duty, while giving developers more ways to offer streaming games.” With the agreement, gamers will be able to stream Xbox PC titles from GeForce NOW to PCs, smartphones, smart TVs, and other devices.

In April, NVIDIA revealed that Google Cloud will be the first cloud services provider to use NVIDIA’s L4 Tensor Core GPU for AI applications.

The L4 Tensor Core GPU offers AI video solutions, with more than 120X times the AI-powered performance of regular CPUs — and it’s 99% more efficient. Google Cloud management noted, “As our customers begin to explore the possibilities of generative AI, we’re proud to offer them NVIDIA’s latest L4 GPU innovation as part of our workload-optimized Compute Engine portfolio.”

The company is also at the forefront of helping to develop autonomous vehicles. NVIDIA is helping Mercedes to emerge as the autonomous driving leader due to its Level 3 system via NVIDIA chips. The Mercedes system also uses LIDAR (Light Detection and Ranging). Mercedes and NVIDIA are leading the race to develop the safest autonomous driving system. I should add that other auto manufacturers – including Jaguar Land Rover, Volvo Cars, and Hyundai Motor Group – are also using NVIDIA’s AI chip and systems, so its automotive business remains very promising.

NVIDIA Smashes Q1 Expectations

Given that NVIDIA is such a major player in the AI arena and the recent AI hype, Wall Street was on pins and needles as to how AI impacted the company’s business.

Not only did NVIDIA not disappoint, but it smashed analysts’ expectations for its first quarter in fiscal year 2024.

First-quarter revenue came in at $7.19 billion. Analysts only expected revenue of $6.52 billion, so NVIDIA topped estimates by 10.3%. Data center revenue hit a record $4.28 billion.

The company also reported first-quarter earnings of $1.09 per share, which was down from $1.36 per share in the same quarter a year ago. Analysts expected earnings of $0.92 per share, so NVIDIA posted an 18.5% earnings surprise.

NVIDIA also provided a positive outlook, as it now expects second-quarter revenue of about $11.0 billion. That compares to revenue of $6.7 billion in the second quarter of fiscal 2023. The consensus outlook estimate called for $7.15 billion, so NVIDIA topped revenue outlook estimates by 53.8%!

NVIDIA’s Executive Vice President and Chief Financial Officer Colette Kress said, “Generative AI drove significant upside in demand for our products, creating opportunities and broad-based global growth across our markets.” (Generative AI is a type of artificial intelligence algorithm that generates a new output, like a text or image, based on examples it’s been given – think of ChatGPT. I should also add that “Generative AI” was mentioned 43 times during NVIDIA’s conference call.)

Jensen Huang, President and Chief Executive Officer of NVIDIA, stated in the company’s earnings call, “Our goal really is to drive architecture, to partner deeply in creating new markets and the new applications that we’re doing and provide our customers with the flexibilities to run NVIDIA everywhere.”

Company management also noted that it’s seeing a transition in the computer industry, with data center infrastructure globally shifting from general purpose to accelerated computing. The transition is accelerating as more companies look to apply AI into their business processes, services and products. As a result, NVIDIA has boosted its data center products production in order to keep up with rising demand.

Shares of NVDA surged more than 24% on Thursday to a new all-time high. Its market cap came close to 1 trillion dollars (it settled around $940 billion) – and marked one of the biggest single-day gains in U.S. market history ever. On Wednesday, NVIDIA had a market cap of about $755 billion. This places NVIDIA close to the “trillion-dollar market-cap club,” which includes Microsoft, Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), and Alphabet Inc. (GOOG). I’ll admit, I don’t think I’ve ever seen a big stock like this go up so quickly.

Looking Forward in the Tech Sector

I’m proud to say that I recommended NVIDIA to my readers well before all of this AI hype. In fact, I added NVIDIA to my Growth Investor Buy List back in May 2019. Since then, our position in the stock is now up nearly 800%! We took advantage of the post-earnings surge and collected partial profits on the stock yesterday, but I am still holding NVIDIA for the long haul as I expect NVIDIA to continue to dominate the AI sector.

NVIDIA’s success lifted the entire tech sector… as other AI-related tech stocks added almost $300 billion in market capitalization on Wednesday after a surge in extended trading.

The phrase “a rising tide lifts all boats” fits well here, folks, and it also bodes well for the fundamentally superior tech stock I am adding to my Growth Investor Buy List today. This stock, like NVIDIA, should profit from accelerating AI adaptation.

This company has been at the forefront of technological change, developing a lot of firsts in the industry. Today, it is well-known as a global leader in high performance server technology solutions.

I’m releasing this new stock – along with three other fundamentally superior companies that are well-positioned to benefit in various corners of the stock market – in my Growth Investor Monthly Issue for June today. To make sure you have access to my new recommendations as soon as they’re available, join me at Growth Investor today.

Click here for more details.

(If you are already a Growth Investor subscriber, I’ll send you the new monthly issue as soon as it’s released today. In the meantime, you can log in here to view your subscription.)


Louis Navellier

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The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA), Microsoft Corporation (MSFT), Alphabet Inc. (GOOG), Amazon.com, Inc. (AMZN), and Meta Platforms, Inc. (META)