Nvidia Shares Up 9%, Surpass $1,000 After Beating Earnings Expectations, 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 giant a market capitalization of more than $2.5 trillion after reporting first-quarter results that once again thwarted forecasts.

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

The company also announced a 10-to-1 stock split and an increased dividend, following some of its Big Tech peers in paying higher quarterly payments to shareholders.

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

For the current quarter, Nvidia expects revenue of $28 billion, plus or minus 2%. That was higher than analysts’ expectations of $26.6 billion.

“The growth of our data center has been driven 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 into consumer internet and enterprise companies, sovereign AI customers, automotive and healthcare, creating multiple multi-billion dollar vertical markets.”

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

In an exclusive interview with Yahoo Finance after the company’s earnings report on Wednesday, Huang dismissed concerns that the company could face stagnant demand as it transitions between current and next-generation AI chips.

“People want to deploy these data centers now,” Huang said. “They want to get our (GPUs) up and running right away and start making money and saving money. That’s why the demand is so high.”

Nvidia’s data center revenue increased 427% year-over-year to $22.6 billion, accounting for 86% of the company’s total revenue in the quarter. Nvidia’s gaming segment, previously its most important business, posted revenue of $2.6 billion. CFO Colette Kress said in a statement Wednesday that large cloud providers account for about 45% of the company’s data center revenue.

In a note to clients published Thursday, JPMorgan analysts led by Harlan Sur wrote that Nvidia “continues to maintain a 1-2 step lead over the competition.” JPMorgan raised its price target on Nvidia shares to $1,150 from $850 and maintained an Overweight rating on the stock.

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On the company’s earnings call, Kress noted that revenue from China fell significantly this quarter because the company was forced to halt shipments of its most powerful chips to the country. The company also expects the market in the region to remain highly competitive in the future.

The company’s stock split – in which shareholders will receive 10 shares for each share of the company they currently hold – will take effect on June 7, and the new dividend will be paid to shareholders on June 28, commencing on June 11.

The stock split is likely to fuel speculation that Nvidia could be added to the price-weighted Dow Jones Industrial Average (^DJI), joining Big Tech competitors like Apple (AAPL), Amazon and Microsoft.

Nvidia’s increased dividend also follows similar moves announced so far this year by companies such as Meta (META) and Alphabet, which initiated a quarterly dividend for the first time, and Apple, which raised its dividend earlier this month.

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

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