Crucial Points to Note
- Following Nvidia’s surpassing of analysts’ quarterly projections and the issuance of a strong sales forecast for the current quarter due to heightened demand for its AI chips, Nvidia shares surged during extended-hours trading on Wednesday.
- Despite facing obstacles from recent U.S. restrictions on AI chip exports to China, Nvidia’s Data Center business, where its AI chip revenue resides, experienced a remarkable five-fold increase in sales during the quarter.
- The potential for Nvidia shares to close above their all-time high presents an opportunity for further bullish momentum, while a setback at this significant chart level could trigger profit-taking activities.
NVIDIA Corporation
Source: TradingView.com.
Nvidia (NVDA) witnessed a notable surge of over 9% in Wednesday’s after-hours trading following the release of its quarterly earnings report that exceeded market expectations and a positive revenue outlook for the ongoing quarter driven by robust demand for its AI chips.
The company, headquartered in Santa Clara, California, disclosed a fiscal fourth-quarter revenue of \(22.10 billion, a substantial increase from \)6.05 billion in the previous year, with diluted earnings per share reaching $4.93 compared to 57 cents. Both revenue and earnings figures outperformed analysts’ forecasts significantly.
The revenue upsurge was propelled by the robust sales of Nvidia’s AI server chips, including the H100—an advanced fourth-generation GPU capable of accelerating AI language model training by four times compared to its predecessors. The company’s Data Center business, which encompasses AI chip sales, reported an impressive 409% year-over-year revenue growth in the period.
Despite the remarkable five-fold expansion in the division’s sales, Nvidia acknowledged that its revenue was constrained by recent U.S. limitations on AI chip exports to China. CEO Jensen Huang stated that they adjusted their products to comply with the restrictions, ensuring they are not susceptible to software manipulation. This adjustment necessitated a reset of their product offerings to the Chinese market.
Looking forward, Nvidia provided a first-quarter sales projection of \(24.0 billion, surpassing the Street’s estimate of \)22.17 billion. Huang expressed optimism to analysts, highlighting favorable conditions for sustained growth. He anticipated that sales would be driven by generative AI and a shift from central processors to the accelerators manufactured by the company. Additionally, Nvidia revealed plans to introduce its highly awaited B100 chip later in the year, albeit expecting limited availability due to overwhelming demand.
NVDA shares broke out of a six-month consolidation phase in early January, progressing to new highs. Despite a recent retreat from the record close of $739.00 established last week, the stock remained significantly above the 50-day moving average before the earnings announcement. Investors are advised to monitor the stock’s response to its all-time high, as breaching this critical level could trigger further bullish momentum, while a rejection might prompt profit-taking.
Nvidia shares climbed by 9.1% to $735.95 in after-hours trading on Wednesday.
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