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

By Stock News On May 22, 2024 13 0

Nvidia (NVDA) reported first quarter earnings after the bell on Wednesday that topped expectations while also announcing a 10-for-1 stock split and an increased dividend, following some of its Big Tech peers in doling out heftier quarterly payments 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 a year ago.

Analysts were expecting 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.

In the current quarter, Nvidia expects revenue of $28 billion plus or minus 2%. That’s better than the $26.6 billion analysts had expected.

Nvidia stock rose as much as 4% in extended trading on Wednesday.

“Our data center growth was fueled by strong and accelerating 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 enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets.”

Wall Street analysts have previously raised concerns about the share of Nvidia’s Data Center revenue that comes from hyperscalers like Microsoft (MSFT), Google (GOOG, GOOGL), Amazon (AMZN), and other Big Tech names. That’s especially true as those companies roll out their own AI accelerator chips.

Still, while non-hyperscaler use of Nvidia chips is growing, CFO Colette Kress said in her own commentary that large cloud providers accounted for around 45% 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 out of China was down significantly in the quarter, since the company was forced to halt shipments of its most powerful chips to the country. What’s more, she said she expects the market in the region to remain very competitive going forward.

Nvidia’s gaming segment, which was previously its most important business, saw revenue of $2.6 billion.

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

The stock split will likely fuel speculation 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 in after-hours trading on Wednesday, meaning the stock would be expected to trade at $98 after the split.

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