Nvidia stock rises from $305 to $381 on weight of influx from orders for AI chips

Nvidia clobbers Q1 expectations with a large revenue beat.
Nvidia raises guidance for Q2 about $4 billion above prior consensus.
Nvidia stock soars to a new all-time high above $375.
NVDA stock adds approximately $173 billion in market cap.

Nvidia (NVDA) stock soared 25% afterhours on Wednesday after the top maker of GPU chips used in artificial intelligence-based large language models (LLMs) like ChatGPT raised its guidance for revenue in the second quarter by nearly $4 billion or 55%. NVDA stock rose from a price of $105.38 to close the post-market session at a new all-time high of $381.08. This boosted its market cap form $755 billion to $944 billion.

The graphics card maker reported fiscal first-quarter revenue of $7.2 billion, whereas Wall Street had expected the past year's semiconductor pullback to lead to just $6.5 billion in sales. The revenue beat was nearly 11% better than expectations but still down from the $8.3 billion mark seen in the same quarter one year ago.

The NASDAQ lost 0.6% in Wednesday's regular session as markets worried about the lack of movement on debt ceiling debates, while the S&P 500 and Dow lost more than 0.7%. Much-watched Snowflake also reported moribund results that sent its stock down more than 12%. Nvidia's enthusiastic results can completely rewrite the market narrative for the rest of the week. Competitors like Advanced Micro Devices (AMD) also saw their post-market share prices skyrocket.

Nvidia earnings news: NVDA adds $189 billion to market cap with major revenue, earnings beat

Nvidia also reported a major earnings beat in the quarter. Adjusted earnings per share of $1.09 beat analyst consensus by 18.5%. Operating income rose 37% from the most recent quarter, and net income rose 25% simultaneously.

Nvidia's always-animated CEO and founder, Jensen Huang, was in prime condition. From his statements, it is clear why the market is eating up his every word. The market only seems to care about artificial intelligence and generative AI, and Nvidia is the picks-and-shovels approach to investing in the space. Nearly all the most sought-after chips for the supposed AI revolution are in the hands of Nvidia.

“A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process," Huang said on the earnings call. “Our entire data center family of products — H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU — is in production. We are significantly increasing our supply to meet surging demand for them."

Speaking of data centers, that segment turned in sales of $4.3 billion in Q1, 14% above the previous year's results. This is significant because Nvidia saw a general deterioration in its data center business over the past year, which analysts remarked upon at the time. Those rainy days appear to be over now.

Additionally, another hard-hit segment – gaming – produced another turnaround. Gaming revenue of $2.24 billion rose 22% over the most recent quarter as distributors began to restock their shelves.

The Professional Visualization segment saw sales rise 31% QoQ, while Automotive revenue surged 114% YoY. The entire quarter was phenomenal, and Nvidia added approximately $189 billion in market cap during the after-hours trade.

Things got really wild when Nvidia guided for $11 billion in sales during the current quarter, which is the second fiscal quarter ending in July. Before the earnings call, Wall Street had been expecting $7.1 billion. Nearly $4 billion appears to have entered the picture in the last 90 days.

Nvidia stock forecast

Nvidia has reached a new all-time high. Shares rose about 23% after hours to $375, far higher than the previous all-time high of $246.47 in November 2021. The Relative Strength Index (RSI) is now strongly overbought, and the stock needs to simmer down. However, this excitement is palpable. These earnings alone will likely spur a broad market reversal higher on Thursday.

NVDA weekly chart

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