It was a bad day for Nvidia naysayers.
The semiconductor giant rose 3.25% today after reporting a stellar first quarter, despite the collateral damage of the ongoing trade war.
- Nvidia reported adjusted earnings per share of $0.81, up 33% from last year and higher than the $0.73 expected.
- Revenue came in at $44.06 billion—a record high, and a 69% increase from the same period last year, beating Wall Street projections of $43.3 billion.
- But guidance came in below forecasts due to an estimated $8 billion loss from export restrictions to China.
This earnings announcement was a pivotal one for Nvidia. Sure, the chipmaker has climbed 21% over the past 12 months, but it’s only up 0.64% this year as trade war tensions jostled the Magnificent Seven. Nvidia found itself square in the crosshairs of the tariff tit-for-tat between the US and China after the White House slapped export restrictions on Nvidia’s H20 chip last month.
Investors were worried that would take a big bite out of profits, but it only cost the company $4.5 billion in excess inventory last quarter and cut potential sales by just $2.5 billion—far better than analysts feared, illustrating the company’s resilience with or without access to the Chinese market.
Other highlights included revenue from data centers—those massively expensive hardware projects Big Tech loves so much—jumping 73% year-over-year to $39.1 billion.
“Global demand for Nvidia’s AI infrastructure is incredibly strong,” said Nvidia CEO Jensen Huang in a statement.
The AI trade is so back
Nvidia’s glow could cast a flattering light on the rest of the semiconductor industry. Shares of Taiwan Semiconductor Manufacturing Company (TSMC), SK Hynix, and Micron ended today in the green. Companies that have business directly with Nvidia, such as Super Micro Computer and Vertiv, will also benefit, although shares of both ended the day in the red.
Beyond hardware, the bullish news could implicate the broader AI trade, too.
“It's hard to be pessimistic about AI when it appears to be emerging as an area of national security for leading countries worldwide,” Morningstar equity analyst Brian Colello wrote in a note today.
Demand for hardware indicates demand for software, too, argued Wedbush analyst Dan Ives: “The AI Revolution is progressing from the chip phase to the software (use case) and infrastructure names that will benefit front and center,” he explained.—LB
Making sense of market moves
Stay up to date on the latest market news with daily analysis of the investing landscape, served up Brew-style.