(BFM Bourse) – The graphics processor specialist delivered its fourth quarter results as well as its forecasts for the current quarter, shattering analysts’ estimates. Nvidia succeeded with flying colors in its meeting with the market…
Nvidia had absolutely no room for error for its grand oral on Wednesday evening. With a price that has tripled in value over the past year, thanks to euphoria over artificial intelligence, the slightest communication from the little market prodigy is monitored like milk on fire.
This is because the American group has accustomed investors to outperforming market consensus, the group being driven by the rise of generative artificial intelligence at the heart of conversational robots, such as ChatGPT. This is what describes Ipek Ozkardeskaya, analyst at Swissquote Bank, cited by AFP since the slightest surprise or disappointment on Nvidia could “trigger an earthquake with a magnitude of 200 billion dollars and a tsunami of tens, or even hundreds of billions of dollars on the market. So much so that Nvidia even takes the liberty of stealing the spotlight from the American Federal Reserve, which also published the minutes of its last monetary policy meeting on Wednesday evening.
A certain excitement was therefore present before this crucial publication for the mood of the markets. On Tuesday, the stock lost more than 4%, on rumors according to which Microsoft would develop hardware supposed to compete with that of Nvidia and therefore reduce its dependence on the graphics card giant. Or this fiery start illustrated the market’s fears of a disappointment or a mixed copy and that it would lead to a plunge in a stock which has gained 45% since the start of the year, after an incredible performance of 240% in 2023?
The verdict therefore fell on Wednesday evening after the close of the American markets. There is no shortage of superlatives to describe Nvdia’s excellent publication. The graphics chip giant wowed investors again with better-than-expected quarterly results
Stratospheric income
The group dominates the market for graphics chips essential for generating advanced tasks and applications in artificial intelligence. Microsoft and Google are therefore equipping themselves with thousands or even tens of thousands of Nvidia A100 graphics processors (GPUs) in their data centers to develop and train their conversational robots, ChatGPT and Bard, respectively.
In the fourth quarter (ended at the end of January 2024), Nvidia once again repeated the feat of exploding analysts’ expectations by revealing revenues of $22.1 billion, compared to $6.05 billion in revenues generated during the same period. period last year. The increase is therefore dizzying, since its sales have soared by 265% over one year. And yet, expectations were already very high, the market consensus was targeting a turnover of 20.4 billion dollars over the period.
“It’s worth noting that the initial consensus for the fourth quarter, ahead of the company’s guidance in November, was for $17.9 billion, underscoring the rapid escalation of Nvidia’s growth trajectory.” , recalls Stephen Innes of SPI Asset Management.
Big point of attention of the market, data center revenues which represented 75% of the group’s overall revenues in the third quarter. For this segment, Nvidia thus recorded a jump of 409% over one year in its turnover, to a record level of 18.4 billion dollars. Stephen Innes adds that Nvidia also exceeded the expectations of analysts who expected $17.21 billion in this segment.
“The sales of [cartes graphiques pour] video games also recorded good results, amounting to $2.9 billion, slightly exceeding expectations,” continues the specialist.
During its fourth financial quarter, Nvidia posted a net profit of $12.3 billion, which reflects profits multiplied by 9 compared to the $1.4 billion published a year earlier.
And in terms of adjusted earnings per share, an indicator closely followed by investors, here too Nvidia atomizes the consensus. This indicator stands at $5.16 where analysts’ expectations were at $4.60. It was multiplied by almost 6 compared to the 0.88 dollars published for the fourth quarter of the previous year.
“Accelerated computing and generative AI have reached a tipping point. Demand is exploding across businesses, industries and nations around the world,” said Jensen Huang, founder and CEO of Nvidia.
“The AI party has only just begun”
Nvidia therefore ends this exceptional year with a stratospheric performance. The American giant saw its turnover soar by 126%, again reaching a record level of $60.9 million. Profits increased nearly 6-fold over one year, to nearly $30 billion.
The results published by Nvidia “confirm that the AI revolution is only just beginning and has not reached its peak,” say Wedbush analysts. “It is difficult to doubt it after these figures and this conference call,” they continue.
Nvidia’s forecast for the first quarter of 2024 (ended at the end of April) once again outperforms consensus, with the company anticipating revenue of $24 billion, slightly higher than the $22.17 billion expected by analysts. analysts. The forecast revealed by Nvidia is understood with a margin of error of plus or minus 2%.
Which implies once again dizzying growth of 189% compared to the $8.29 billion for the first quarter of 2024, and “demonstrates the company’s optimistic outlook for the next quarter” for Stephen Innes.
“Even a modest 10% increase in revenue represents a staggering $2 billion. This highlights the substantial growth and market influence that Nvidia has achieved in recent years,” continues the specialist.
Nvidia also expects a first-quarter adjusted gross margin of 77%, plus or minus 50 basis points. Analysts on average forecast a gross margin of 75.6%.
Star of the Shepherd of the markets
The markets will not shy away from their pleasure in tasting these exceptional results. On Wall Street, Nvidia shares gained 9% after these announcements on Wednesday evening. And 9% on the scale of Nvidia, whose market capitalization is 1,666 billion dollars, represents a gain equivalent to the stock market weight of Totalenergies (149.64 billion dollars) or Texas Instruments (146.16 billions of dollars).
“The options market was implying a potential move of nearly 11% in one direction or the other following Nvidia’s earnings release, suggesting the event could lead to one of the largest make-or-break events of value in a single session in the history of the American stock market on Thursday”, reports Stephan Innes.
Enough to satisfy the many investors invested in the Nvidia stock, which is to date the most traded stock on the New York Stock Exchange, surpassing Tesla which has held this title since 2020. Indeed, around $30 billion in Nvidia shares have changed hands daily on average over the past 30 sessions, compared to $22 billion for the electric vehicle specialist over the same period.
Sabrina Sadgui – ©2024 BFM Bourse