Nvidia stock rises 9%, hits $1,000 after beating revenue forecasts, announces stock split and dividend hike

Shares of Nvidia ( NVDA ) rose 9.3% on Thursday, closing above $1,000 for the first time and giving the chip company a market capitalization north of $2.5 trillion.

Nvidia’s first-quarter results, released after the bell on Wednesday, showed adjusted earnings per share (EPS) rose to $6.12 on revenue of $26 billion, up 461% and 262%, respectively, from a year ago.

The company announced a 10-for-1 stock split and increased dividend, following some of its big tech peers in offering higher quarterly payouts to shareholders.

Analysts had expected adjusted EPS of $5.65 on revenue of $24.69 billion, according to data from Bloomberg. 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 expects revenue of $28 billion, plus or minus 2%. That was better than the $26.6 billion analysts were expecting.

“Our data center growth was driven by strong and rapid demand for generative AI training and inference on the Hopper platform,” Nvidia CEO Jensen Huang said in a statement. , Sovereign AI, automotive and healthcare clients are creating multi-billion dollar vertical markets.”

Wall Street analysts have previously raised concerns about the share of Nvidia’s data center revenue coming from hyperscalers like Microsoft ( MSFT ), Google ( GOOG , GOOGL ), Amazon ( AMZN ) and other big tech names. This is especially true as those companies release their own AI accelerator chips.

In an exclusive interview with Yahoo Finance following the company’s earnings report on Wednesday, Huang pushed back against concerns that the company could face a slowdown in demand as it transitions between its current and next-generation AI chips.

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“People want to use these data centers right away,” Huang said. “They want to keep ours [graphics processing units] Start working and earning money now and start saving money. So that demand is very strong.”

Nvidia’s data center revenue rose 427% year-over-year to $22.6 billion, accounting for 86% of the company’s total revenue in the quarter. Nvidia’s gaming division, previously its most important business, saw revenue of $2.6 billion. CFO Colette Kress said in a statement on Wednesday Large cloud providers accounted for about 45% of the company’s data center revenue.

In a note to clients issued Thursday, JP Morgan analysts led by Harlan Suhr wrote Nvidia “continues to be 1-2 steps ahead of competitors.” JP Morgan raised its price target on Nvidia shares to $1,150 from $850 and reiterated an overweight rating on the stock.

In the company’s earnings call, Kress pointed out that revenue from China fell significantly in the quarter because the company was forced to stop exporting its most powerful chips to the country. The company also expects the market in the region to be very competitive going forward.

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

The stock split could prompt 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.

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Nvidia’s beefed-up dividend follows similar moves announced so far this year by the likes of Meta (Meta) and Alphabet, which both started quarterly dividends for the first time, and Apple, which raised its dividend earlier this month.

NVIDIA's CEO Jensen Huang demonstrates products on stage during the annual Nvidia GTC artificial intelligence conference at the SAP Center in San Jose, California on March 18, 2024.  (Photo by JOSH EDELSON / AFP) (Photo by JOSH EDELSON/AFP via Getty Images)

Jensen Huang, CEO of NVIDIA, demonstrates products on stage during the annual NVIDIA GTC artificial intelligence conference at the SAP Center on March 18, 2024 in San Jose, California. (JOSH EDELSON/AFP via Getty Images) (Josh Edelson via Getty Images)

Email Daniel Hawley at [email protected]. Follow him on Twitter @Daniel Hawley.

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