Nvidia stock spiked by 26% after increased earnings driven by the demand for its AI chips beat expectations.
Nvidia reported April quarter adjusted earnings per share of $1.09, compared with Wall Street’s consensus estimate of 92 cents. Total revenue was $7.2 billion which was above expectations from analysts of $6.5 billion. For the same period, gaming revenue declined by 38% from a year ago, but sales for its data center segment, thanks to increased demand from AI rose by 14%.
The company provided a revenue forecast for the July quarter, which was also way above expectations, citing the increased demand for the chips it produces for artificial intelligence applications.
For the current quarter, Nvidia gave an average revenue forecast of $11 billion, well above the analyst consensus of $7.2 billion.
Nvidia’s automotive division, including chips and software to develop self-driving cars, grew 114% year over year but remains comparatively small at under $300 million in sales for the quarter.
Net income for the quarter was $2.04 billion, or 82 cents a share, compared with $1.62 billion, or 64 cents for the period, and its overall sales fell 13% from $8.29 billion a year ago.
Prior to the after-hours surge, Nvidia stock has appreciated by 109% from 2023, mostly driven by optimism stemming from the company’s leading position in the market for artificial intelligence chips.
Nvidia is a leading maker of chips used for video games, artificial intelligence, and cloud computing applications inside PC and server hardware.
“The computer industry is going through two simultaneous transitions—accelerated computing and generative AI,” Nvidia CEO Jensen Huang said in the press release. “Our entire data center family of products—H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU—is in production. We are significantly increasing our supply to meet surging demand for them.”
Nvidia’s chips have high exposure to generative AI, which has been trending this year. The technology uses text, images, and videos in a brute-force manner to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.