Key Points
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Nvidia’s fiscal first-quarter revenue rose 85% year over year, reaching a record $81.6 billion.
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Management also raised the dividend 25-fold and authorized an additional $80 billion in share repurchases.
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Past post-earnings dips have tended to fade as the business has continued to compound.
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Nvidia (NASDAQ: NVDA) reported its fiscal first-quarter results on Wednesday, and the headline numbers were the kind most companies can only dream about. The AI chipmaker beat consensus estimates on the top and bottom lines as well as on its outlook for the coming quarter. Management also unveiled an additional $80 billion share repurchase authorization and raised the quarterly dividend 25-fold to $0.25 per share.
And yet, shares fell almost 2% on Thursday.
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Surprisingly, this is now the fourth quarter in a row that Nvidia stock has slipped after a beat-and-raise quarter. The disconnect may have less to do with the report itself and more to do with just how much strength is already baked into the share price. Going into the release, Nvidia had climbed about 20% off its February low, with shares hitting an all-time closing high of $235.74 on May 14 — less than a week before the report.
Image source: Getty Images.
Growth that’s still accelerating
Nvidia’s first-quarter revenue surged to a record $81.6 billion — up 85% year over year and up 20% sequentially. While this is impressive, the trajectory of Nvidia’s revenue growth rates over recent quarters arguably tells the story even better: quarterly revenue has climbed from $46.7 billion to $57.0 billion to $68.1 billion to $81.6 billion over the past four quarters, with each sequential dollar increase bigger than the last.
Data center revenue remained the main driver of the business’s growth. The segment hit $75.2 billion, up 92% year over year and 21% sequentially. Powering this segment, data center networking revenue jumped 199% from a year earlier to $14.8 billion — a sign that customers are still building out full systems, not just buying graphics processing units (GPUs).
And profitability was extraordinary, with non-GAAP (adjusted) earnings per share rising 140% year over year. Further, Nvidia’s gross margin was an incredible 75%, and free cash flow hit a record $48.6 billion, giving the company plenty of room for the larger buyback and dividend it announced.
Then there’s the guidance.
Management forecast fiscal second-quarter revenue of $91 billion, plus or minus 2%. At the midpoint, that’s about 12% sequential growth and roughly 95% year-over-year growth.
“The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed,” said founder and CEO Jensen Huang in the company’s earnings release.
On the company’s fiscal first-quarterearnings call Nvidia’s CEO doubled down.
“This was an extraordinary quarter. Demand has gone parabolic,” he said in his closing remarks, attributing the surge to the arrival of agentic AI and noting that “tokens are now profitable, so model makers are in a race to produce more.”
A familiar post-earnings setup
So why the muted reaction?
Investors had set a very high bar. With shares trading at a price-to-earnings ratio in the mid-40s going into the report, and the AI trade still the dominant market story, the threshold for a positive surprise has crept higher with each quarter.
History suggests the immediate stock move rarely defines the longer arc, though. After Nvidia’s February report, shares dropped about 5% that day. From the Feb. 25 close through May 20, however, the stock climbed about 14% — about double the S&P 500’s gain over the same stretch.
A similar move, of course, isn’t guaranteed this time. With Nvidia priced as it is, investors have already baked in a long stretch of strong growth and stable margins. Should that thesis crack — whether through a pause in hyperscaler buildouts or more credible competition from in-house custom silicon — the post-earnings dips could become more durable.
But, for now, the underlying picture remains hard to argue with. Revenue is accelerating, not slowing. And by management’s own framing, demand has gone parabolic. When a business keeps delivering above raised expectations — now four quarters running — the gap between the report and the reaction tends to close eventually. It just may take more than a single trading day.
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Daniel Sparks and his clients no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
