Will all the hype about AI lead to sustained earnings results that live up to Wall Street’s lofty expectations? That was the question that had investors looking at Nvidia’s earnings report like it was a second Super Bowl Wednesday. The semiconductor giant, whose chips are key to generative artificial intelligence, was even labeled by Goldman Sachs analysts as “the most important stock on planet Earth” ahead of the release of fourth-quarter earnings. On Wednesday, CEO Jensen Huang and company managed to live up to Wall Street’s rosy forecast.
Nvidia on Wednesday reported first-quarter revenue of $22.1 billion, up 265% from a year ago, versus analysts’ consensus forecast for a 240% jump to $20.6 billion. Adjusted earnings per share also rose 765% from a year ago to $5.15 per share, compared to a consensus forecast of $4.64. And gross margins, a key metric of profitability, continued to grow amid the AI boom, reaching 76.7% in the quarter.
Nvidia shares jumped in early trading after investors digested the numbers, before rising more than 10% by 5 p.m. ET. Huang, who is also the founder of NVIDIA, said the gains are proof that “accelerated computing and generative artificial intelligence have reached the tipping point” in a note.
“Demand is increasing across businesses, industries and nations,” he added, promising that “the year ahead will bring major new product cycles with exceptional innovations to help push our industry forward.”
The prospects of Nvidia, which has been closely watched by Wall Street for evidence of how the artificial intelligence boom is shaping up, also came in ahead of expectations. Management expects revenue of $24 billion in the first quarter, compared to analysts’ forecasts of $22.5 billion.
Analysts celebrated Nvidia’s economic results. Wedbush’s Dan Ives argued that Huang asserted his position as “The Godfather of Artificial Intelligence” in another “mic-drop” moment. “The AI revolution is here,” Ives said. And Gene Munster, a veteran technology analyst and managing partner at Deepwater Asset Management, argued that this is just the beginning of multiple AI “waves” that will push Nvidia stock higher.
“Long term: The story is intact,” Munster wrote in a send on X. “Business continues despite headwinds from Chinese restrictions. The reason is that we are still at the beginning of the first wave of the wave of AI infrastructure, sold to hyperscalers and AI startups.”
Before Wednesday’s strong earnings, Nvidia shares had driven about 30% of the S&P 500’s jump so far this year. Shares of the chipmaker are up about 40% year to date and a staggering (some say unsustainable) 1585% over the past five years before its fourth-quarter earnings release.