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Nvidia’s stock rockets upon earnings beat as AI demand hits ‘tipping point’

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Nvidia Corp. crushed expectations with its latest results and outlook Wednesday, helping to send its shares soaring as management talked up a bright future fueled in part by artificial-intelligence demand.

The chip giant has benefited from frenzied spending on AI hardware, and that was on display again Wednesday as the company reported fiscal fourth-quarter results. Revenue came in at $22.1 billion, up from $6.05 billion a year before, while analysts had been modeling $20.4 billion.

Data-center revenue at Nvidia
NVDA,
-2.85%

rocketed more than 400% from a year before to hit $18.4 billion, while the FactSet consensus was for $17.06 billion.

Nvidia forecasts continued strong growth for the ongoing quarter, well above expectations. The company is calling for $24.0 billion in revenue, up from $7.2 billion a year prior, while analysts were modeling $22.2 billion. Meanwhile, data-center revenue is expected to grow sequentially.

Investors, though, increasingly have been thinking beyond the current period, and Nvidia’s management offered upbeat commentary on that bigger picture.

While acknowledging that Nvidia doesn’t offer guidance beyond the ongoing quarter, Chief Executive Jensen Huang said on the earnings call that “fundamentally, the conditions are excellent for continued growth” over the next two calendar years “and beyond.”

Huang called out a shift to accelerated computing from general computing, as well as booming interest in generative AI. Those areas have “hit the tipping point,” he said in Nvidia’s earnings release.

Shares of Nvidia were up more than 7% in after-hours trading Wednesday.

Read: The AI boom of today and the telecom bubble of 1990s share these similarities

Nvidia has faced supply constraints in recent quarter, and those are easing, according to Huang. At the same time, however, he expects “demand will continue to be stronger” than Nvidia’s supply provides throughout the year.

The company posted fiscal fourth-quarter net income of $12.3 billion, or $4.93 a share, compared with $1.4 billion, or 57 cents a share, in the year-earlier period. On an adjusted basis, the company earned $5.16 a share, while analysts were projecting $4.59 a share.

See also: Stocks owned by Nvidia saw surge in bullish bets days before filing sparked massive rally

The company saw a 56% year-over-year rise gaming revenue for the latest quarter, with that total coming in at $2.9 billion. The FactSet consensus was for $2.7 billion.

Nvidia generated $463 million in professional visualization revenue, up 105%, along with $281 million in automotive revenue, down 4%. Analysts were looking for $422 million and $275 million, respectively.

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