(AOF) – Nvidia presented targets higher than expectations last night and a split of its shares. In the first quarter, ended at the end of April, the specialist in chips for artificial intelligence applications saw its net profit soar by 628% to $14.88 billion, or $5.98 per share. Adjusted earnings per share came in at $6.12, well above expectations at $5.65. Its revenue jumped 262% to $26 billion, beating the consensus of $24.7 billion.
Its data center products business saw revenue explode 427% to $22.7 billion. Wall Street was targeting $21.32 billion.
Not only did profits clearly exceed expectations, but Nvidia also revealed a favorable outlook. The group targets an average of $28 billion in sales, whereas the market anticipates $26.8 billion. Adjusted gross margin, a widely followed measure of profitability, is expected to reach 75.5% compared to 78.9% in the first quarter.
On the occasion of this publication, Nvidia announced a division by 10 of its title in order to make its ownership more accessible. It will be effective on June 10.
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Growing market and price tensions
According to SIA, global chip sales stood at $151.7 billion in the first quarter of 2022, an increase of 23% year-on-year. Sales increased in all major regional markets and for all product categories. As global uncertainties, including the war in Ukraine and the health crisis, weigh on supply chains, demand for semiconductors continues to significantly exceed supply. Manufacturers Samsung and TSMC have announced that they will raise their prices, in a context where players in the sector have good room for maneuver and benefit from reinforced negotiating power. However, wage increases and component prices could weigh on future performance.
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New historic decline in computer sales
After having already suffered a sharp decline last year, the market is faced with demand which remains weak. Supply suffers from excess inventory, which impacts prices. According to IDC, PC sales fell by another 29% in the first quarter, falling to less than 57 million units. This is much less than the 59.2 million devices sold over the same period in 2019, before Covid. Demand is down for individuals and businesses, which have equipped themselves with the rise of teleworking. The continued rise in interest rates in the United States and Europe, and its impact on inflation, is also detrimental. Among market leaders, Lenovo, Dell and Asus posted volume declines of more than 30%. HP recorded sales down 24%. Apple faced the biggest drop, with sales collapsing by more than 40% year-on-year. The Californian group could suffer from its rather high-end positioning.