Short update NVIDIA ($NVDA): Continues to surge, exceeding expectations amid AI boom

Updated revenue and EPS projections included further down

Introduction

NVIDIA has once again demonstrated impressive performance, surpassing analyst expectations for the eleventh consecutive quarter. In its most recent earnings report, the company delivered revenues of $44.06 billion for the first quarter of the year, representing a significant 69% increase compared to the same quarter last year. Profits rose by 26%, reaching $18.8 billion, up from $14.9 billion last year. Adjusted earnings per share (EPS) also outperformed expectations, coming in at $0.96, slightly above the forecast of $0.93.

The outlook remains bright, as NVIDIA expects even stronger performance in the upcoming quarter. The company anticipates revenues of approximately $45 billion, highlighting continued robust demand despite geopolitical challenges, particularly the ongoing trade restrictions affecting its China operations.

Trade restrictions have notably impacted NVIDIA, with the U.S. government limiting exports of the company’s advanced H20 microchips to China. This restriction cost NVIDIA approximately $4.5 billion in inventory and lost potential revenue. Despite this setback, CEO Jensen Huang remains optimistic, emphasizing the immense global demand for NVIDIA’s AI-driven infrastructure. Huang noted the rapid mainstream adoption of AI models, underscoring a bullish future where demand is expected to accelerate significantly.

Fundamental strength and strong growth potential

NVIDIA’s fundamental business drivers remain robust, particularly evident in their data center and gaming segments. Data center revenues reached approximately $39.1 billion, driven by strong networking performance, which rose significantly despite restrictions on advanced chip exports. Gaming revenues notably exceeded expectations, reaching about $5 billion, reflecting pent-up demand for NVIDIA’s latest Blackwell GPUs, especially appealing for AI-driven personal computing.

Strategically, NVIDIA’s position as a leader in AI infrastructure continues to strengthen. Hyperscale customers are deploying NVIDIA’s NVL72 racks at an unprecedented rate, demonstrating the critical role NVIDIA’s technology plays in powering the next wave of AI development. These deployments are substantially exceeding industry forecasts, indicating robust future growth.

Supply chain concerns, which had previously worried some investors, appear well-managed. Inventory levels have stabilized, indicating efficient alignment between GPU production and hyperscale deployment. NVIDIA also maintains a solid cash flow, generating approximately $26.2 billion in free cash flow this quarter, underpinning its continued investments and shareholder returns through stock buybacks.

Geographic and market expansion

Geographically, NVIDIA continues diversifying its revenue sources. Singapore’s share of revenue increased significantly, primarily reflecting billing to U.S.-based clients. Meanwhile, the proportion of revenues from China has declined notably due to trade restrictions, now constituting only 13% of total revenue, with further declines expected in the immediate future.

Strategically positioned for significant long-term growth, NVIDIA benefits from substantial AI infrastructure investments globally, including landmark projects such as the multi-billion-dollar Stargate initiative, sovereign AI projects in Saudi Arabia, and a 5GW AI campus in the UAE, each signifying massive potential for further revenue expansion. Saudi Arabia’s HUMAIN project could equal up to 280,000 GPUs for Nvidia.

Financial outlook

Let´s have a quick look at revenue and EPS projections as these also continue to develop. From my model I get the following:

Source: own model

Source: own model

Investment perspective

NVIDIA’s consistent financial outperformance, coupled with its leadership in the rapidly expanding AI infrastructure market, positions it strongly for future growth. The company’s ability to navigate geopolitical challenges, combined with resilient demand for its GPUs, supports a highly optimistic outlook. With AI becoming increasingly mainstream and demand for related infrastructure accelerating, NVIDIA remains a compelling investment in the evolving tech landscape.

Given these strong fundamentals and growth potential, NVIDIA continues to be a standout in my investment portfolio, reflecting confidence in its trajectory to further capitalize on the global AI revolution.

With that, thanks for reading I truly appreciate the interest. Below are a few ideas for further readings and inspirations.