Nvidia forecasts quarterly revenue above estimates, announces stock split

By Arsheeya Bajwa and Stephen Nellis

(Reuters) -Nvidia forecast second-quarter revenue above estimates on Wednesday and announced a ten-for-one forward stock split, impressing investors who have already tripled the chipmaker’s market value in the past year on AI optimism.

Shares of the Santa Clara, California-based company climbed 4% after the bell. The AI poster child’s stock has risen more than 90% so far this year.

Demand for Nvidia’s chips stands unparalleled as enterprises spend billions to procure advanced semiconductors to power data centers capable of processing complex AI tasks.

Alphabet, Microsoft, Amazon and other technology companies have competed for a limited supply of Nvidia’s high-end chips as they race to dominate AI computing.

Nvidia’s contract chipmaker, Taiwan Semiconductor Manufacturing, has also been working to increase its advanced packaging capacity, a key supply chain constraint for the processors.

The Taiwanese company said in April it expects to more than double its advanced packaging capacity this year.

The company forecast second-quarter revenue of $28 billion, plus or minus 2%. Analysts on average were expecting revenue of $26.66 billion, according to LSEG data. 

Nvidia reported first-quarter revenue of $26.04 billion, beating estimates of $24.65 billion.

Dominating more than 80% of the market for AI chips, Nvidia stands in a unique position as both the largest enabler as well as beneficiary of surging AI development.

Sales at the data center segment, its largest by revenue, grew 427% to $22.6 billion in the first quarter ended April 28, coming in above estimates of $21.320 billion, according to data from FactSet.

Among Nvidia’s customers is Meta Platforms, which last month increased the midpoint of its 2024 capital expenditure forecast by about $4 billion.

While most so-called hyperscalers are also developing their own custom AI chips, analysts do not expect these to eat away at Nvidia’s market share.

Nvidia expects second-quarter adjusted gross margin to be 75.5%, plus or minus 50 basis points. Analysts on average forecast gross margin to be 75.8%.

Nvidia reported first-quarter adjusted gross margin of 78.9% compared with estimates of 77%. Aspiring competitor Advanced Micro Devices had recorded an adjusted margin of 52% in its fiscal first quarter.

Excluding items, the company earned $6.12 per share in the first quarter, beating estimates of $5.59.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Arun Koyyur)