Nvidia continues to make a preposterous amount of money on its AI tech.
As reported by Forbes this morning, Nvidia has absolutely shattered Wall Street earnings forecasts by a mind-blowing 600%.
Forecasts originally put Nvidia’s earnings at around $5.60 in per-share earnings and $24.59 billion in sales for the three month period ending April 30. Nvidia nuked those figures from orbit, reporting $6.12 earnings per share and $26 billion in sales. Compared to the same period in 2023, Nvidia’s revenues are up 268%, which is big but nothing compared to its profits, which soared by an eye-watering 628%. It is, unsurprisingly, the most profitable quarter in the company’s history, and takes the record for its highest ever sales.
Nvidia’s AI-centric datacentre division are responsible for the lion’s share of this meteoric growth, bringing in $22.6 billion in rev last quarter by themselves. That’s a leap of 427% year-on-year and, as Forbes points out, a 20x multiplier on the $1.1 billion the same division brought in back in 2020. But what about the graphics cards? the PC gamers might wonder. Doesn’t Nvidia still make those? Technically yes, but they’re far from a core pillar of the business these days. Compared to its AI operations, graphics cards are practically an afterthought for Nvidia now, and these earnings pretty cleanly demonstrate why.
Regardless, I imagine those who bought Nvidia shares many years ago are feeling pretty good about the decision right now. Fair play to them for hanging on this long. It really paid off.
But if you’re one of the many, many people who DIDN’T buy shares when they were much lower than their current $950 price point, there’s some good news. Nvidia also announced it’s doing a 10-for-1 stock split on June 7 this year. This will effectively bring that share price down from $US950 to a much more enticing $95 per share, without dinging its current valuation. If you want to get in on Nvidia shares, that’ll probably be your best opportunity.
The question, of course, remains: how long can Nvidia sustain this kind of AI-driven growth? The space is currently enjoying a kind of gold rush mentality as Silicon Valley giants race to sell their AI tools and chatbots to anyone with an even half-baked pitch. The results, of course, still leave a lot to be desired — Nvidia’s generative AI tech for video games remains one of the most cringe-inducing proof-of-concept reels I’ve seen in a long time, and even giants like Google can’t seem to stop their search AI from recommending people drink litres of their own piss.
So yes, Nvidia may be riding high right now, but what goes up must eventually come down (or at the very least, settle into a rhythm from which it can later tumble). It’s gonna be fun to keep an eye on.
Image: BING-JHEN HONG, iStock, Kotaku Australia
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