Nvidia stock pops 4% after earnings beat forecasts, announces stock split and dividend hike

Sara AdmMay 23, 2024

122 2 minutes read

Nvidia stock pops 4% after earnings beat forecasts, announces stock split and dividend hike

Nvidia (NVDA) reported first-quarter results after the bell on Wednesday that beat expectations, while also announcing a 10-for-1 stock split and dividend increase, following the lead of some of its peers. big tech that distributed higher quarterly payouts to shareholders.

The company reported adjusted earnings per share (EPS) of $6.12 on revenue of $26 billion, a jump of 461% and 262%, respectively, from last year.

Analysts expected adjusted EPS of $5.65 on revenue of $24.69 billion, according to Bloomberg data. The company reported adjusted EPS of $1.09 on revenue of $7.19 billion in the same quarter last year.

For the current quarter, Nvidia forecasts revenue of $28 billion at plus or minus 2%. This is better than the $26.6 billion expected by analysts.

Nvidia shares rose 4% in extended trading Wednesday.

“Our data center growth has been fueled by strong and growing demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang said in a statement. “Beyond cloud service providers, generative AI has expanded to consumer internet companies and enterprises, sovereign AI, automotive and healthcare customers, creating multiple verticals of several billion dollars.

Wall Street analysts have already expressed concerns about how much of Nvidia’s data center revenue comes from hyperscalers like Microsoft (MSFT), Google (GOOG, GOOGL), Amazon (AMZN) and other big names in technology. This is especially true as these companies deploy their own AI accelerator chips.

Yet as non-hyperscale use of Nvidia chips increases, CFO Colette Kress said in her own commentary that large cloud providers account for about 40% of the company’s data center revenue.

Nvidia’s data center revenue jumped 427% year over year to $22.6 billion, accounting for 86% of the company’s total revenue for the quarter. But Kress pointed out that revenue from China fell significantly during the quarter as the company was forced to halt shipments of its most powerful chips to the country. Additionally, she said she expects the region’s market to remain very competitive in the future.

Nvidia’s gaming segment, previously its largest business, reported revenue of $2.6 billion.

The company’s stock split – under which shareholders will receive 10 shares for every share of the company they currently own – will take effect on June 7 and its new dividend will be paid on June 28 to shareholders starting from June 11.

The stock split will likely fuel speculation that Nvidia could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining Big Tech peers like Apple (AAPL), Amazon and Microsoft. Nvidia stock was trading near $980 per share after hours Wednesday, meaning the stock is expected to trade at $98 after the split.

Nvidia’s dividend increase also follows similar moves announced so far this year by Meta (META) and Alphabet, which both launched quarterly dividends for the first time, and Apple, which increased its dividend earlier this month.