NVIDIA's Earnings Crushed Expectations, And The AI Titan Is Bringing More Products This Year
AInvestThursday, Feb 22, 2024 5:42 am ET
2min read
NVDA --

On Wednesday, the king of the AI industry, NVIDIA, belatedly brought its fourth quarter financial report and officially closed this round of tech stock financial reports.

Even under the market's extremely high expectations, NVIDIA's revenue and profits comprehensively crushed market consensus. Moreover, CEO Jensen Huang stated that despite supply constraints will continue throughout the year, a significant new product cycle will be brought in within the year.

The stock rose more than 10% after the earnings were post, equivalent to increasing market value by over $230 billion compared to the previous night's closing and making the chipmaker become the third largest market value company in U.S. stocks.

Specifically, NVDIA recorded a revenue of $22.1 billion, making a 265% y/y jump and set a historical high. It"s worth noting that this quarterly figure even surpassed the revenue that the company made throughout the whole2021.

Net income was $12.8 billion. This marks a yearly increase of 491% and leads to an EPS of $5.16, which beat the market consensus by 10%.

NVIDIA"s gross margin also rose to a shocking 76.7%, which further elevated from last quarter's 75% and is up by nearly 11 percentage points from the same period last year. This number perfectly shows the company"s dominated pricing power of the company in graphics cards drove profitability.

As for the next quarter, NVIDIA predicts its quarterly revenue will reach $24 billion, equivalent to a 9% QoQ increase, and 334% YoY increase. It also surpassed the market forecast of $22.2 billion.

Its Gross profit margin expected to further enhance, expected in the range of 76.3%-77%, due to the explosion of demand for AI end products and further rise in volume and price.

Jensen Huang, NVIDIA's CEO, said, Accelerated computing and generative AI have hit the tipping point, and Demand is surging worldwide across companies, industries and nations. Our Data Center platform is powered by increasingly diverse drivers. Vertical industries - led by auto, financial services and healthcare - are now at a multibillion-dollar level."

NVIDIA's jaw-dropping performance from last quarter was still driven by the data center business led by AI graphics cards. The department's fourth-quarter revenue reached a record high of $18.4 billion, up 27% QoQ and 409% YoY.

NVIDIA's flagship H100 chip continued to be snapped up by global tech giants, and the short-term supply-demand imbalance is unlikely to improve significantly. Huang said supply constraints will persist throughout the year. With the computational hardware demand of generative AI and the entire industry shifting from CPUs to NVIDIA accelerators, demand for the company's GPUs will remain high.

As for the new generation of power chip H200 that was launched in November last year, it still has not been in the large-scale shipment stage yet, but it will be deployed in Amazon Cloud Computing AWS, Google Cloud, Microsoft Azure, etc. this year.

CFO Colette Kress stated during the financial report teleconference that market demand for the company's next-generation products far exceeds the supply level, because nearly every industry has touched upon building and deploying AI solutions.

Meanwhile, the RTX 40 Super series of graphics cards that NVIDIA released in January is also included in this financial report, but initial signs show that the momentum of AI PC demand can continue to be released.

NVIDIA's gaming business (including PC GPU chips) revenue this time is 2.9 billion USD, which remains stable QoQ and an YoY increase of 56%. The PC market is slowly recovering from the winter of consumer electronics, and how AI PCs will impact ordinary consumers is worth looking forward to.

In addition, NVIDIA's visualization business revenue was $463 million, up 11% QoQ, and 105% YoY, which includes its Metaverse platform Omniverse. Its automotive business revenue was 281 million USD, up 8% QoQ, and down 4% YoY, slightly disappointing.

Overall, the market focus is still on NVIDIA's data center business, and that generative AI + power chip supply shortage is the main storyline. With NVIDIA's absolute product power in this field, who knows what kind of breakthrough will its new round of product cycle bring to AI and consumer electronics? And who knows which company will be surpassed by NVDIA on valuation? Maybe it"s Apple? Or Maybe it"s Microsoft?


$NVDA(NVDA)

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.