Nvidia Beats Q1 Expectations with Surging Demand for Data Centre Products Driven by Generative AI
Nvidia, the leading provider of graphics processing units (GPUs), has reported its first-quarter earnings for fiscal year 2024, beating analyst expectations on both revenue and earnings per share. The company’s shares soared following the announcement, rising by over 20% in post-market trading. Nvidia has attributed the strong results to surging demand for its data centre products, driven by the increasing use of generative artificial intelligence (AI) in businesses. The company’s CEO, Jensen Huang, said that a trillion dollars of installed global data centre infrastructure would transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process. Nvidia’s outlook for Q2 also exceeded Wall Street’s expectations, with the company forecasting revenue of $11bn, up 64% from the same period last year. The company expects gross margins to rise by nearly 4 percentage points in the July quarter.
Nvidia’s data centre family of products, including H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU, is already in production, with the company significantly increasing its supply to meet surging demand. Nvidia’s Q1 earnings show a strong performance in its gaming division, which contributed a little over 30% to the company’s total sales last quarter. The company launched the GeForce RTX 4070 GPU based on the Ada architecture, which enables DLSS 3, real-time ray-tracing and the ability to run most modern games at over 100 frames per second at 1440p resolution. Nvidia also added 36 DLSS gaming titles, bringing the total number of games and apps to 300. The company expanded GeForce Now’s game titles to more than 1,600.
Nvidia’s outlook is positive, with analysts expecting the company’s earnings per share to rise 30% over the next 12 months, compared to 6% for a basket of 11 other semiconductor companies. However, the company’s RTX 40-series GPU launches have received a lukewarm response in the market, and its sequential revenue growth for gaming is expected to decelerate to just 5% in Q1. Nvidia’s revenue growth over the past five quarters has shown the effects of the gaming segment.
0. “NVIDIA Announces Financial Results for First Quarter Fiscal 2024” NVIDIA Blog, 24 May. 2023, https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-first-quarter-fiscal-2024