Artificial intelligence (AI) leader Nvidia surpassed $1,000 per share in after-hours trading on the 22nd (local time), buoyed by better-than-expected earnings and a 10-for-1 stock split announcement. Expectations are pouring in that Nvidia will hit the 'Thousand Nvidia' mark (Nvidia stock price at $1,000) based on its strong growth at the closing price as well.
Jensen Huang, CEO of Nvidia, said that demand for the company's semiconductors continues to outpace supply and expressed confidence that the next-generation chip 'Blackwell,' scheduled for release at the end of this year, will continue to drive revenue growth.
Strong Earnings + Stock Split Boost... Surpasses $1,000 in After-Hours Trading
Nvidia's stock closed the regular session at $949.50, down 0.46% from the previous day on the New York Stock Exchange, but immediately afterward, it surpassed the $1,000 mark in after-hours trading. As of 5:50 p.m. Eastern Time, Nvidia's stock was trading above $1,009, up more than 6% in after-hours trading.
Although it was after-hours trading, this is the first time Nvidia's stock has exceeded $1,000. The surge was driven by positive factors such as the first-quarter earnings report, second-quarter earnings guidance, and the stock split announcement released immediately after market close. At one point, the stock rose more than 7%.
Nvidia reported first-quarter (February to April) revenue of $26 billion, a 262% increase year-over-year, and adjusted earnings per share (EPS) of $6.12, up 461%. These figures exceeded market expectations. The company also forecasted revenue of $28 billion for the current quarter, again surpassing Wall Street's estimates. Additionally, Nvidia decided to split its common stock 10-for-1. The quarterly cash dividend was also increased to $0.10 per share from $0.04 in the previous quarter.
Nvidia's strong performance is seen as an indication that demand for AI chips remains robust. Colette Kress, Nvidia's Chief Financial Officer (CFO), explained, "This is due to increased shipments of our flagship AI chip, the H100, part of the Hopper graphics processor series," adding, "The biggest highlight this quarter is Meta Platforms' announcement of the large language model LLaMA 3, which uses 24,000 H100 GPUs." She also mentioned, "We are seeing immediate and strong revenue confirmation."
Bloomberg News commented, "The biggest question about today's earnings report was whether Nvidia's numbers justify the stock's rally," and concluded, "It did not disappoint." Nvidia's stock has surged more than 90% so far this year.
Given the current trend, many forecasts suggest that reaching the 'Thousand Nvidia' mark at the closing price is imminent. Ahead of the earnings announcement, Stifel, Barclays, and Baird raised their price targets for Nvidia to $1,085, $1,100, and $1,200, respectively. The average price target among major Wall Street investment firms compiled by Yahoo Finance was $1,035.
Earlier, Dan Niles, founder of Niles Investment Management, appeared on CNBC and compared Nvidia's position in the AI boom to Cisco's central role in building the internet in the 1990s, predicting the stock rally would continue. He said, "We are still in the early stages of AI development," and added, "Nvidia's earnings will increase 3 to 4 times over the next 3 to 4 years, and the stock price will follow accordingly."
Jensen Huang: "Ready for the Next Wave of Growth... New AI Chips Every Year"
Nvidia expressed confidence in future revenue growth. CEO Jensen Huang said during an earnings conference call with analysts, "We are ready to embrace the next wave of growth," and added, "We expect to generate a significant portion of this year's revenue from the Blackwell chip, scheduled for release at the end of the year." He predicted that the current situation, where demand for Nvidia products outpaces supply, will continue into next year. Customers for the Blackwell chip include Amazon, Google, Meta Platforms, Microsoft (MS), OpenAI, Oracle, Tesla, and xAI.
Regarding concerns that a lull might occur during the transition to the next-generation Blackwell chip as some buyers hold off on purchasing the existing Hopper model, Huang dismissed these worries, saying, "Everyone wants to build out infrastructure as quickly as possible." CFO Kress also drew a line under such concerns, stating, "Demand for the Hopper series far exceeds supply." Earlier reports suggested that Amazon had stopped ordering existing semiconductors from Nvidia in preparation for Blackwell's launch, but the company promptly denied these claims.
Additionally, Huang announced that Nvidia is developing the next-generation chip following Blackwell and plans to shift from unveiling new chip architectures every two years to doing so annually. Nvidia released Ampere in 2020, Hopper in 2022, and is preparing to launch Blackwell at the end of 2024. The currently high-demand H100 AI chip belongs to the Hopper series.
Huang explained, "We can confirm there is another chip after Blackwell," adding, "We are operating on a one-year cycle." Previously, Wall Street reports suggested that 'Rubin,' the successor to Blackwell, could be released in 2025.
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