Nvidia (NVDA) stock soars! Once Again Smashes All Expectations, Time to Invest?

Nvidia (NVDA) has reported its second-quarter earnings, surpassing already high expectations for the graphics chip giant, thanks to the ongoing AI trend driving market growth.

The company disclosed a revenue of $13.51 billion, a remarkable 101% increase from the previous year. Adjusted earnings per share came in at $2.70, marking a substantial 429% rise compared to the previous year. Analysts had projected revenue to be around $11.04 billion with earnings per share at $2.07, according to Bloomberg data.

Nvidia also provided guidance for the current quarter, forecasting a revenue of $16 billion, with a plus or minus 2% range. This guidance significantly exceeded Wall Street’s already optimistic projection of $12.5 billion in revenue.

Following the earnings announcement, Nvidia’s stock surged by as much as 9% in after-hours trading, reaching a record high of $515 per share.

Nvidia’s earnings report was seen as a significant test for the ongoing AI hype cycle, which has driven various companies to venture into AI technologies in hopes of capitalizing on the trend. However, no other company has experienced the level of positive change in their business as Nvidia has.

Nvidia’s CEO, Jensen Huang, stated, “A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”

Breaking down the segments, Nvidia reported data center revenue of $10.3 billion and gaming revenue of $2.5 billion, surpassing expectations of $8 billion and $2.4 billion, respectively. The company also announced a new share repurchase plan of $25 billion and indicated its intention to buy back stock in the current fiscal year.

Investors had already anticipated a strong quarter from Nvidia after the company indicated that revenue for the period would be approximately $11 billion, with a plus or minus 2% range.

Huang further commented, “During the quarter, major cloud service providers announced massive NVIDIA H100 AI infrastructures. Leading enterprise IT system and software providers announced partnerships to bring NVIDIA AI to every industry. The race is on to adopt generative AI.”

Additionally, software giant Snowflake (SNOW) also reported better-than-expected earnings, which, when combined with Nvidia’s positive results, led to an after-hours surge in various AI-related stocks.

Stocks like C3.ai (AI), Palantir (PLTR), Marvell Technology (MRVL), and MongoDB (MDB) all saw gains of over 3% in after-hours trading. Notably, C3.ai and MongoDB had experienced a decline of roughly 10% in the previous month prior to the earnings report. Snowflake’s stock also rose by over 3% during Wednesday’s after-hours session.

The rapid increase in demand for Nvidia’s chips has led some in the financial industry to question whether its main supplier, TSMC, can keep up with the production of graphics processors needed by Nvidia’s customers. In July, Tesla’s CEO, Elon Musk, mentioned that Tesla would take Nvidia hardware as fast as Nvidia could supply it.

The AI frenzy gained momentum in November 2022 when OpenAI introduced its generative AI app, ChatGPT. While AI technology has been around for a while, ChatGPT’s rapid popularity propelled the technology onto Wall Street’s radar as one of the fastest-growing apps in history.

Since then, major tech companies such as Microsoft (MSFT), Google (GOOG, GOOGL), and Meta (META) have either unveiled their own generative AI tools or announced their plans to develop them.