Nvidia Earnings Beat Delivers $80B Tech Fatigue Buffer

Nvidia (NVDA) reported quarterly results that beat expectations, and addressed what happens if traders get tired of tech: it announced an additional $80B share repurchase alongside a hefty increase to its quarterly dividend. 

Nvidia shares were up in early trading Thursday, in line with a rise in the PHLX Semiconductor Sector Index (SOX). 

The semiconductor giant reported $1.87 in non-GAAP earnings per share on revenue of $81.6 billion. That was well ahead of analyst expectations of $1.76 in earnings per share on revenue of $78.91 billion. 

“Demand has gone parabolic,” CEO Jensen Huang noted as he closed out the first-quarter conference call, summarizing the AI environment and desire for advanced chips. 

Data Center revenue was once again the standout figure, at $75.2 billion, a 92% jump from a year ago under the company’s new segmentation model. Nvidia said it is separating sales into Data Center (Hyperscale and ACIE, which incorporates AI Cloud, Industrial and Enterprise) and Edge Computing (devices, physical AI). 

Guidance for the second quarter was strong at roughly $91.0 billion, ahead of the $87.36 billion analysts penciled in. Nvidia is assuming no Data Center compute revenue from China in its outlook, given the push there for domestically produced chips. 

The $80 billion buyback and the dividend bump from $0.01 to $0.25 per share is strategic. 

Thomas Hayes of Great Hill Capital told Diane King Hall Wednesday that while traders are hyper-focused on semiconductors and tech investments, resolution of the war in Iran is likely to lead to a drop in yields and a rotation into unloved, dividend-paying companies in sectors like healthcare and staples. By aggressively boosting its dividend and buying back shares, Nvidia is positioning itself to remain attractive even if the broader market decides to rotate out of high-growth tech. 

Is Nvidia expensive? Andrew Arons said in an interview with Jenny Horne Wednesday that shares do not look expensive with a price-to-earnings ratio of roughly 45 times. He said, “as we continue in this massive infrastructure spend, a lot of money is going into Nvidia, and I think the stock is fairly priced here.” 

Dimitra DeFotis contributed to this article

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