3 key takeaways from Nvidia’s Q1 earnings report

Nvidia Corp (NASDAQ: NVDA) reported record results for its fiscal first quarter on Wednesday, despite a global chip shortage. The company also gave guidance that significantly topped Wall Street estimates.

1. Financial performance

Nvidia reported $1.91 billion (£1.35 billion) of net income in the first quarter that translates to $3.03 per share. In the same quarter last year, its net income was capped at $917 million, or $1.47 per share. On an adjusted basis, the American multinational earned $3.36 per share versus the year-ago figure of $1.80 per share.

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Nvidia generated $5.66 billion of revenue in Q1 that represents an 84% annualised growth. According to FactSet, experts had forecast the company to post $5.4 billion of revenue and $3.29 of adjusted EPS. Nvidia had topped analysts’ estimates in the prior quarter (Q4) as well.  

2. Sales from individual business segments

According to Nvidia, gaming sales jumped 106% in the recent quarter to a record $2.76 billion. CMP chips designed for professional cryptocurrency mining operations that the tech giant launched in Q1 generated $155 million of sales. Data-Centre sales also climbed to a record $2.05 billion, or 79% higher than last year. Both gaming and data-centre sales came in better than what analysts had anticipated.

3. Q2 guidance and CEO’s remarks

For the fiscal second quarter, Nvidia now forecasts its revenue to fall in the range of $6.17 billion to $6.43 billion. In comparison, analysts are calling for a lower $5.47 billion in revenue this quarter.

Commenting on the earnings report on Wednesday, CEO Jensen Huang said:

“Our data centre business continues to expand, as the world’s industries take up Nvidia AI to process computer vision, conversational AI, natural language understanding and recommender systems. We continue to make headway with our planned acquisition of Arm, which will accelerate innovation and growth for the Arm ecosystem.”

Susquehanna senior analyst Christopher Rolland, however, isn’t sure if the ARM deal is ultimately going to happen.

Impact on the share price

Despite beating multiple quarterly records, Nvidia shares were down about 1% in after-hours trading on Wednesday. Including the price action, the stock is now exchanging hands at $622 per share. In comparison, it had started the year at a lower $525 per share.

Nvidia performed massively upbeat in the stock market last year with an annual gain of close to 125%. At the time of writing, it is valued at about $391 billion and has a price to earnings ratio of 91.04.