Nvidia beats the market: revenues jumped by 85%; improves forecasts

At this time, Nvidia shares are down by more than a percent in late trading on the Nasdaq.

In addition, it provided a revenue forecast that was much higher than expected. The company expects to report revenue of $91.0 billion in the quarter ending in July, while the FactSet consensus forecast was $87.3 billion.

In addition, Nvidia sets a target for an adjusted gross profit rate of 75%. Its adjusted gross profit rate was 75% in the last quarter as well.

The company’s board of directors approved a new plan for own purchase of shares (Buyback) in the huge amount of 80 billion dollars. In addition, the quarterly dividend was raised to 25 cents per share, compared to only one cent previously.

The move comes after a particularly strong quarter in terms of cash flow: free cash flow amounted to $48.6 billion, compared to $34.9 billion in the previous quarter, and compared to $26.1 billion in the same period last year.

The announcement signals that Nvidia continues to generate huge amounts of cash from the demand for AI chips, and that the company’s management chooses to return a significant portion of it to investors.

Nvidia’s CEO, Jensen Huang, in a statement. “Agentic AI is already here; It performs productive work, generates real value and is growing at a fast pace among different companies and industries.”

Ahead of the publication of Nvidia’s results, last night (Tuesday) Bank of America published a “buy” recommendation for the company’s stock and raised the target price from $300 to $320 compared to the price of $223 near the close of trading on Wednesday and minutes before the publication of the report.

The bank’s analysts emphasize that the stock is trading at a significant and unjustified discount compared to the other technology giants: Microsoft, Apple, Amazon, Tesla, Meta and Google. By comparison, Nvidia’s free cash flow is similar to that of Microsoft and Apple combined. In their estimation, increasing returns to investors (who currently receive a meager 0.02% dividend) may attract new investors and close the pricing gap.

The bank dismisses fears of growing competition in the field of AI chips, and estimates that Nvidia will maintain a dominant market share of about 70% of a target market of 1.7 trillion dollars by 2030, and despite the increase in the importance of core processors (CPU) in server farms – a market saturated with competitors that also includes Intel and AMD – Nvidia has an adequate answer in the form of “Vera” processors.

The “Vera Robin” servers – which will contain Nvidia’s core processors, “Vera”, and the graphics processors of the Robin type – are expected to be successfully launched in the second half of the year, according to the analysts at the American bank.