Nvidia Earnings Beat Expectations, Boosting AI Stocks

Nvidia (NVDA), a leading provider of graphics processing units (GPUs) and artificial intelligence (AI) solutions, reported its fourth-quarter and fiscal 2023 earnings on Wednesday, beating analysts’ estimates and sending its shares higher in after-hours trading. The company also announced a 4-for-1 stock split, subject to shareholder approval, which could make its shares more accessible to individual investors.

Nvidia’s Q4 and FY 2023 Highlights

Nvidia posted revenue of $6.05 billion for the fourth quarter, up 2% from the previous quarter and down 21% from a year ago. The company attributed the year-over-year decline to the impact of the COVID-19 pandemic on its gaming and automotive segments, as well as the supply chain disruptions caused by the global chip shortage. However, Nvidia’s data center segment, which includes its AI products, saw a 61% increase in revenue year-over-year, reaching $3.81 billion.

Nvidia Earnings Beat Expectations, Boosting AI Stocks
Nvidia Earnings Beat Expectations, Boosting AI Stocks

The company’s earnings per share (EPS) for the quarter were $0.57 on a GAAP basis and $0.88 on a non-GAAP basis, beating the consensus estimates of $0.47 and $0.82, respectively. For the full fiscal year 2023, Nvidia reported revenue of $26.97 billion, flat from a year ago, and EPS of $1.74 on a GAAP basis and $3.34 on a non-GAAP basis.

Nvidia also announced that it will pay a quarterly cash dividend of $0.04 per share on March 29, 2023, to shareholders of record on March 8, 2023. Additionally, the company said that it plans to conduct a four-for-one split of its common stock in the form of a stock dividend, which will be distributed on July 19, 2023, to shareholders of record on June 21, 2023. The stock split is intended to make Nvidia’s shares more affordable and attractive to a broader range of investors.

Nvidia’s Outlook and Growth Drivers

Nvidia’s outlook for the first quarter of fiscal 2024 is optimistic, as the company expects revenue of $6.30 billion, plus or minus 2%, which would represent a 72% increase year-over-year. The company also expects its gross margin to improve to 66.5% on a GAAP basis and 66.7% on a non-GAAP basis.

Nvidia’s CEO Jensen Huang said that the company is well-positioned to benefit from the growing demand for AI solutions across various industries and applications. He cited the company’s recent launches of new products and services that leverage its AI platform, such as:

  • The NVIDIA DGX™ AI supercomputer, which features the NVIDIA H100 GPU with the Transformer Engine and Quantum-2 networking fabric, designed to accelerate large-scale AI workloads.
  • The NVIDIA AI Enterprise software suite, which enables enterprises to deploy AI applications on NVIDIA-Certified Systems™ from leading server vendors.
  • The NVIDIA NeMo™ and BioNeMo™ customizable AI models, which allow customers to build their own generative AI models and services for natural language processing, computer vision, speech synthesis, and biomedical applications.

Huang also said that the company is making progress in its pending acquisition of Arm, a leading provider of chip design technology, which would create a powerhouse in the semiconductor industry. He said that the deal has received support from customers and partners around the world, and that the company is working with regulators to obtain the necessary approvals.

How Nvidia’s Earnings Affect Other AI Stocks

Nvidia’s strong earnings report and upbeat guidance boosted other AI stocks in the market, as investors recognized the potential of the sector amid the rapid adoption of AI technologies. Some of the notable AI stocks that gained after Nvidia’s earnings announcement include:

  • Alphabet (GOOG), which owns Google Cloud Platform (GCP), one of the leading cloud providers of AI services and solutions. GCP recently launched Bard, an AI chatbot that can answer complex questions by summarizing online information.
  • Microsoft (MSFT), which offers Azure AI, a comprehensive set of cloud-based AI tools and services for developers and enterprises. Azure AI powers various applications such as Cortana, Microsoft Teams, Bing, and Xbox.
  • Adobe (ADBE), which develops software for content creation, marketing, data analytics, document management, and publishing. Adobe uses AI and machine learning to enhance its products and services, such as Creative Cloud, Experience Cloud, and Document Cloud.
  • Bosch (BOSCHLTD), which is a global leader in industrial technology and engineering. Bosch uses AI to improve its products and solutions for mobility, energy efficiency, smart homes, smart cities, and healthcare.
  • Persistent Systems (PERSISTENT), which is an Indian IT services company that specializes in digital transformation and cloud computing. Persistent Systems partners with leading AI companies such as IBM Watson and Amazon Web Services (AWS) to deliver AI solutions to its clients.
  • KPIT Technologies (KPITTECH), which is an Indian IT consulting and software company that focuses on the automotive and mobility sectors. KPIT Technologies uses AI to develop solutions for autonomous driving, connected vehicles, electrification, and smart mobility.
  • Cyient (CYIENT), which is an Indian engineering and technology company that serves various industries such as aerospace, defense, healthcare, transportation, and energy. Cyient leverages AI to optimize its engineering design, manufacturing, and operations processes.
  • Happiest Minds Technologies (HAPPSTMNDS), which is an Indian digital transformation and IT services company that offers solutions for cloud, IoT, analytics, and AI. Happiest Minds Technologies helps its clients harness the power of AI to improve their customer experience, operational efficiency, and innovation.

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