Home Latest Insights | News Nvidia Posts Impressive $13.5 Billion Q2 Earnings, Thanks to the Rise of Generative AI

Nvidia Posts Impressive $13.5 Billion Q2 Earnings, Thanks to the Rise of Generative AI

Nvidia Posts Impressive $13.5 Billion Q2 Earnings, Thanks to the Rise of Generative AI

Nvidia, an American technology company that is well-known for designing and manufacturing graphics processing units (GPUs) for gaming, data centers, and AI applications, posted an impressive second-quarter report (Q2), thanks to AI.

Nvidia reported a revenue of $13.51 billion in the second quarter, up 88% from the first quarter (Q1), and up 101% from a year ago.

The company’s Q2 earnings surpassed Wall Street expectations and was double the $6.7 billion it generated in the same period last year. Also, it smashed analysts polled by Yahoo Finance forecast Q2 revenue of $11.22 billion.

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Nvidia reported a GAAP net income of $6.18 billion compared to the $656 million it earned in the same year-ago period, upwards of a ninefold gain.

Its net income skyrocketed even from the first quarter when it reported earnings of $2.04 billion. Its earnings per diluted share for the quarter were $2.48, up 854% from the same period last year. Analysts polled by Yahoo Finance expected earnings per diluted share of $2.09.

The company’s gaming unit which was once the main driver of revenue, posted a Q2 revenue of $2.49 billion, up 22% from last year. It is now overshadowed by the data center unit. Nvidia’s data center business generated $10.32 billion in revenue, up 141% from the previous quarter and up 171% from a year ago.

Data center revenue nearly tripled year-on-year, driven primarily by accelerating demand for cloud from cloud service providers and large consumer internet companies for its HGX platform, the engine of generative and large language models.

Speaking on Nvidia’s eye-popping Q2 earnings, the company’s CEO Jensen Huang, said the company bet heavily on AI and no one knew it, eventually the bet has massively paid off.

In his words,

“A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI. The world has something along the lines of about a trillion dollars worth of data centers installed in the cloud, and that trillion dollars of data centers is the process of transitioning into accelerated computing and generative AI.

“We are seeing two simultaneous platform shifts at the same time. Nvidia GPUs connected by our Mellanox networking and switch technologies and running our CUDA AI software stack make up the computing infrastructure of generative AI. During the quarter, major cloud service providers announced massive Nvidia H100 AI infrastructures. Leading enterprise IT systems and software providers announced partnerships to bring Nvidia AI to every industry. The race is on to adopt generative AI”.

During the second quarter of fiscal 2024, NVIDIA returned $3.38 billion to shareholders in the form of 7.5 million shares repurchased for $3.28 billion, and cash dividends. As of the end of the second quarter, the company had $3.95 billion remaining under its share repurchase authorization.

On August 21, 2023, the Board of Directors approved an additional $25.00 billion in share repurchases, without expiration. NVIDIA plans to continue share repurchases this fiscal year. Nvidia will pay its next quarterly cash dividend of $0.04 per share on September 28, 2023, to all shareholders of record on September 7, 2023. The company has forecasted a $16 billion revenue for the third quarter.

Lately, Nvidia has become the stock market darling on every investor’s lips. Analysts say that Nvidia is benefitting from being a company in the right place at the right time, where its GPU chips are in high demand to run large language models and other AI-fueled workloads. This in turn is driving the company’s revenue growth.

Nvidia’s performance is being driven in particular by the AI boom which has tripled the value of its shares this year and has seen the company achieve a Market valuation of more than $1 trillion.

The company has shown that AI is highly beneficial, and its remarkable revenue earnings have seen other tech companies race to invest heavily in AI.

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