Nvidia Q1 Earnings Surge Amid Strong AI Demand

Nvidia reported a 69% rise in revenue to $44.1 billion in Q1 earnings, surpassing expectations. Adjusted EPS was $0.81, with data center revenue soaring 73%. The chip export restrictions remain a concern as Nvidia forecasts $45 billion revenue for Q2.

Date: 01-06-2025

AI Rating: 8

Nvidia's latest earnings report reveals several key metrics that are relevant for professional investors. The company recorded a remarkable revenue growth of 69% year-over-year, translating to $44.1 billion, significantly exceeding analyst expectations of $43.3 billion. This massive jump can be attributed primarily to the robust performance in its data center segment, where revenue soared by 73% to $39.1 billion. The continued growth in this area is encouraging, as it positions Nvidia well within the AI sector, which is currently experiencing heightened demand.

Another highlight is the company's earnings per share (EPS), with an adjusted figure of $0.81 reported for Q1, beating the consensus. Without the $4.5 billion write-down for the H20 chips, the adjusted EPS would have been significantly higher, at $0.96. This level of earnings reflects Nvidia's ability to generate profits even when facing headwinds from the international chip export restrictions that could impact its future revenues, with a forecast of $45 billion for Q2.

Gross margins also stood at a considerable 71.3%, suggesting that despite facing some operational challenges, the company maintains its pricing power and cost control. Investors have reacted positively, evidenced by a 4.9% increase in Nvidia’s stock price in after-hours trading following the earnings report.

On the other hand, the challenges posed by chip export restrictions could impede Nvidia's prospects in international markets and restrict growth potential. The forecast of $45 billion in revenue, impacted by these restrictions, indicates the company is aware of potential obstacles but is managing investor expectations adeptly.

When looking at the comparative performance of Nvidia and CoreWeave, it is notable that CoreWeave’s stock outperformed Nvidia's in after-hours trading, gaining 5.6%. CoreWeave reported an astonishing 420% increase in revenue to $981.6 million, despite its net loss widening. This showcases a strong demand for AI computing services that utilizes Nvidia components. However, investors should be cautious given CoreWeave’s growing operational losses and interest expense.

In summary, Nvidia remains a strong player in the AI and data center markets, characterized by strong earnings, revenue, and margins. The growth prospect remains solid despite the headwinds from export restrictions. However, as investor sentiment grows towards CoreWeave’s volatility and growth potential, it could become an attractive alternative in the AI sector.

Stocks: NVDA