Nvidia’s strong performance in the most anticipated quarter of the earnings season demonstrates their continued leadership in the AI chip industry. The company far surpassed expectations on both revenue and earnings, with a significant revenue guide for the future. CEO Jensen Huang’s broader vision for the company, including a 10-for-1 stock split, reinforces Nvidia’s position as a key player in the shift towards accelerated computing.
The company’s strong results were driven by growth in all customer types, with enterprise and consumer internet companies leading the way. Large cloud companies, such as Amazon, Microsoft, and Alphabet, represent a significant portion of Nvidia’s data center revenue. Nvidia’s CFO estimates that for every $1 spent on Nvidia AI Infrastructure, a cloud provider has the opportunity to earn $5 in GPU instant hosting revenue over four years.
Key customer call-outs in the quarter included Tesla’s expansion of its training AI cluster and Meta’s announcement of Llama 3. Nvidia sees automotive as a huge vertical this year, with a multi-billion revenue opportunity. The company also highlighted the growth of sovereign AI, with revenue expected to approach high single-digit billions of dollars this year.
Looking ahead, Nvidia expects supply for the H100 to improve but remains constrained on the H200. Demand for Hopper is expected to continue, with Blackwell revenue potentially becoming significant later this year. The company is ramping up new products for the Chinese market that do not require export control licenses, but China is not expected to be a significant driver of revenue moving forward.
Overall, Nvidia’s strong quarterly results and positive outlook emphasize the company’s continued growth and leadership in the AI chip industry. With a price target increase to $1,200 and a buy rating maintained, Nvidia remains a strong investment choice for the long term.