Will all the AI hype lead to lasting earnings results that live up to Wall Street’s lofty expectations? That was the question that had investors watching Nvidia’s earnings report like it was a second Super Bowl on Wednesday. The semiconductor giant, whose chips are foundational for generative AI, even had Goldman Sachs analysts label it “the most important stock on planet earth” before its fourth-quarter earnings release. And CEO Jensen Huang & Co. managed to live up to Wall Street’s rosy forecasts on Wednesday.
Nvidia turned in first-quarter revenues of $22.1 billion on Wednesday, up 265% from a year ago, compared with analysts’ consensus forecast for a 240% jump to $20.6 billion. Adjusted earnings per share also rose 765% from a year ago to $5.15 per share, versus a consensus forecast for $4.64. And gross margins, a key profitability metric, continued to rise amid the AI boom, hitting 76.7% in the quarter.
Nvidia shares whipsawed in early after-hours trading as investors digested the numbers, before rising more than 10% by 5 p.m. ET. Huang, who is also a cofounder of Nvidia, said that the earnings are evidence that “accelerated computing and generative AI have hit the tipping point” in a statement.
“Demand is surging worldwide across companies, industries, and nations,” he added, promising that the “year ahead will bring major new product cycles with exceptional innovations to help propel our industry forward.”
Nvidia’s outlook, which has been carefully watched by Wall Street for evidence of how the AI boom is developing, also came in ahead of expectations. Management forecast revenues of $24 billion in the first quarter, compared with analysts’ forecasts of $22.5 billion.
Analysts celebrated Nvidia’s earnings results. Wedbush’s Dan Ives argued that Huang affirmed his standing as “the Godfather of AI” in another “drop the mic” moment. “The AI revolution is here,” said Ives. And Gene Munster, a veteran tech analyst and managing partner at Deepwater Asset Management, argued that this is just the beginning of multiple AI “waves” that will drive Nvidia shares higher.
“Long term: The story is intact,” Munster wrote in a post on X. “The business is powering along despite the headwind from China restrictions. The reason is we are still early in the first wave of the AI infrastructure wave, selling to hyper-scalers and AI startups.”
Before Wednesday’s strong earnings, Nvidia shares had driven roughly 30% of the jump in the S&P 500 so far this year. The chipmaker’s stock soared roughly 40% year to date, and an incredible—some argued, unsustainable—1,585% over the past five years before the fourth-quarter earnings release.