Nvidia released its fourth-quarter earnings after the market closed on Wednesday. The Silicon Valley giant exceeded Wall Street's projections, driving its stock price higher as the leading player in artificial intelligence continued its winning streak.
During the three-month period ending last month, Nvidia recorded sales of $22.1 billion, marking a remarkable 265% increase compared to the same quarter the previous year and comfortably exceeding the average analyst estimate of $20.4 billion. The company's net income for Q4 reached $12.3 billion, showcasing a staggering year-over-year profit surge of 769%, while its adjusted earnings per share of $5.16 exceeded estimates of $4.59.
This marks the third consecutive quarter in which Nvidia has reported record-breaking profits and sales. Following the earnings announcement, Nvidia's shares jumped 5% in after-hours trading, supported by bullish sales guidance for the current quarter.
The company also provided a forecast for the first quarter that exceeded analysts' expectations, anticipating revenue of $24 billion, plus or minus 2%, compared to Wall Street's expectation of $21.9 billion.
Despite recent fluctuations in its share price amid broader tech sector downturns, Nvidia has been one of the most prominent stocks in the US in recent months. Its stock price has skyrocketed from below $120 to nearly $700 over the past 15 months, propelling Nvidia's market value from just over $300 billion to over $1.7 trillion.
Nvidia's surge in value has been accompanied by substantial earnings growth, driven by advancements in AI technology. Chief Executive Jensen Huang attributed the company's success to the burgeoning field of generative artificial intelligence, which has significantly boosted Nvidia's valuation over the past year. He noted a surge in demand across various companies, industries, and countries.
Nvidia's data center unit, a key indicator of AI demand, experienced significant growth, with revenue reaching $18.40 billion, up 409% from the previous year and surpassing estimates of $17.06 billion. Huang described Nvidia's high-end chips as "AI-generation factories" driving a new industrial revolution across multiple sectors.
However, Nvidia faces increasing competition, particularly from AMD, which is heavily investing in its own AI chips, such as the MI300X. Despite claims from AMD that its chip surpasses Nvidia's H100 in certain tasks, Nvidia has contested these assertions, citing incomplete testing by AMD. Additionally, Intel remains a competitor, continually enhancing its server chips.
The question remains whether Nvidia can sustain its financial performance to justify its valuation, which ranks it among the world's most valuable companies. In the stock screener ranking companies by various parameters, Nvidia is among the top 5 most capitalized American companies.
This article was written in cooperation with TradingView