While Nvidia’s share price slipped following its earnings release, analysts have described the results as “near flawless”, saying they further reinforce the AI investment thesis, with a reporting structure overhaul also helping to improve transparency.
Nvidia reported record revenue for the first quarter ended on 26 April, at US$81.6 billion ($114 billion), up 20 per cent from the last quarter and up 85 per cent from a year ago. This meant the company beat analyst expectations of US$78.86 billion.
In a statement, Nvidia founder and chief executive Jensen Huang said the buildout of AI factories is now accelerating at “extraordinary speed”.
“Agentic AI has arrived, doing productive work, generating real value and scaling rapidly across companies and industries.
“Nvidia is uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open source model, and scales everywhere AI is produced — from hyperscale data centers to the edge,” Huang said.
The company reported record data centre revenue of US$75.2 billion, up 21 per cent from the last quarter and 92 per cent from a year ago. According to Bloomberg data, this meant it also beat analyst estimates of US$72.48 billion.
For the quarter, non-GAAP earnings per diluted share was US$1.87, which LSEG said also beat analyst estimates.
In addition to the strong results, Nvidia authorised an additional US$80 billion in share buybacks and boosted its quarterly cash dividend from 1 cent to 25 cents per share to be paid on 26 June.
Despite these headline successes, the company’s shares fell around 3 per cent in after-hours trading.
Speaking to Investor Daily, Global X senior investment strategist Billy Leung said while the company delivered a “near flawless quarter”, the market was looking for something “beyond flawless”.
“That tells you how elevated expectations have become around AI,” Leung said.
However, he argued that the result did not weaken the AI thesis but instead reinforced it, pointing to broadening demand, on-track product cycles, and Nvidia’s management now openly describing demand as going “parabolic”.
ETF Shares chief investment officer David Tuckwell agreed, adding that Nvidia’s quarterly earnings have become a “charade” where no matter how good the results are, the stock price falls anyway.
“Today is another example of this where a clean beat and strong forward guidance has resulted in its share price falling slightly after hours for no clear or obvious reason,” Tuckwell told Investor Daily.
Reporting overhaul
Along with the results, Nvidia also announced it is transitioning to a new reporting framework which it said will better reflect its current and future growth drivers. Under the new framework, the company will split its business into two market platforms: Data Center and Edge Computing.
“Changing the reporting structure is probably a couple of quarters overdue,” Tuckwell said.
“Historically, Nvidia cut its teeth making graphics cards for video game consoles, which were subsequently repurposed for bitcoin and Ethereum mining. Sales of Nintendo Switches were a key sensitivity for Nvidia as too was the bitcoin/Ethereum price. But those days are well and truly dead with now over 90 per cent of revenue becoming AI-related.”
He added that investors are seeking greater transparency over which companies are buying Nvidia’s AI chips, amid recent concerns that the “hyperscalers” could displace Nvidia by choosing cheaper alternatives.
Tuckwell said this is being addressed through a split of the Data Centre segment into two sub-markets, separating hyperscalers from ‘ACIE’ which stands for AI Clouds, Industrial and Enterprise.
Nvidia said ACIE will address its “growth opportunity” in diverse AI purpose-built data centers and AI factories across industries and countries.
“Nvidia is dealing with the market’s biggest fear head on and allowing it to see exactly who is buying its chips,” Tuckwell said.
As he noted, the figures indicate that Nvidia’s customer base is broadening beyond major players such as Microsoft and Google, and, perhaps more importantly, that hyperscalers are continuing to purchase its chips.
The view ahead
For the second quarter, Nvidia projected revenue of US$91 billion, ahead of the average analyst estimate of US$87.4 billion but much lower than the highest projections of up to US$96.2 billion, according to Bloomberg.
The company also said it is again not assuming any data centre compute revenue from China in Q2.
While Bloomberg characterised the outlook as disappointing, given investors have become accustomed to Nvidia consistently surpassing expectations, Tuckwell and Leung were more broadly positive.
“I continue to believe that Nvidia will become a US$100 trillion market cap company one day. Its CUDA [Compute Unified Device Architecture] software supports a 5 million developer army now, of the kind its rivals can only dream of,” Tuckwell told this publication.
He added that data suggests that the CUDA developer army is getting stronger rather than weaker.
Meanwhile, Leung said the AI thesis remains very much intact following the results, but cautioned that broader market conditions are the key risk investors should be watching.
“For investors, the bigger risk now isn’t whether AI spending slows. It’s whether higher rates and inflation start putting pressure on valuations across global equity markets.”
