Nvidia (NVDA) reported outstanding first quarter earnings on Wednesday, surpassing analysts' expectations and announcing a 10-for-1 stock split along with an increased dividend. The company's strong performance was largely driven by the growing demand for generative AI training and inference on its Hopper platform, leading to a remarkable 461% increase in adjusted earnings per share (EPS) and a 262% jump in revenue compared to the same quarter last year.
The company reported adjusted EPS of $6.12 on revenue of $26 billion, significantly higher than the analysts' expectations of $5.65 and $24.69 billion, respectively. In the current quarter, Nvidia expects revenue of $28 billion plus or minus 2%, exceeding the $26.6 billion analysts had anticipated.
Nvidia CEO Jensen Huang attributed the company's data center growth to the "strong and accelerating demand for generative AI training and inference on the Hopper platform," which has expanded beyond cloud service providers to consumer internet companies, enterprise, sovereign AI, automotive, and healthcare customers, creating multiple multibillion-dollar vertical markets.
Despite concerns about the share of Nvidia's Data Center revenue coming from hyperscalers like Microsoft, Google, Amazon, and other Big Tech names, CFO Colette Kress noted that large cloud providers accounted for mid-40% of the company's Data Center revenue. Nvidia's Data Center revenue jumped an astonishing 427% year-over-year to $22.6 billion, accounting for 86% of the company's total revenue for the quarter.
The company's stock split, effective June 7, will provide shareholders with 10 shares for every one share they currently own. This move is expected to make Nvidia's stock more accessible to employees and investors, with trading on a split-adjusted basis commencing at market open on June 10. The company's new dividend will be paid on June 28 to shareholders as of June 11.
Nvidia's stock split announcement has fueled speculation that the company could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining Big Tech peers like Apple, Amazon, and Microsoft. With the stock currently trading near $980 per share in after-hours trading, the split would bring the price down to around $98 per share.
The company's decision to increase its dividend follows similar moves by other tech giants, such as Meta and Alphabet, which initiated quarterly dividends for the first time this year, and Apple, which recently raised its dividend.
Nvidia's historic rally over the past five years, with the stock price soaring by 25-fold, can be attributed to the company's emergence as the central hardware player in the artificial intelligence boom. While Nvidia was long known as the primary maker of advanced graphics processing units (GPUs) for video games, its recent success has been largely driven by the growing demand for AI hardware.
The company's fiscal first quarter revenue growth of 262% marked the third straight quarter of growth in excess of 200%, underscoring the tremendous impact of the AI-driven boom on Nvidia's financial performance.
In addition to the stock split, Nvidia also announced an increase in its quarterly cash dividend from 4 cents per share to 10 cents on a pre-split basis. After the split, the dividend will be a penny a share, making it more accessible to a broader range of investors.
