Nvidia (NVDA) Stocks Surge after Strong Q4 Earnings with Demand Outstripping Supply

NVIDIA (NVDA) announced “surprise earnings” for the last quarter, causing its stock price to surge 16% on the 22nd (local time) and setting a new record.

NVIDIA’s revenue for the fourth quarter (November to January) of the fiscal year 2024 was $22.1 billion, up 265% from the previous year, and Non-GAAP earnings per share (EPS) were $5.16, up 486% from the prior year, far exceeding the consensus.

The data center division has led the performance for four consecutive quarters, demonstrating $18.4 billion, an increase of 409% from the previous year and 27% from the prior quarter. It is evaluated that the strong demand for H100 continues, and the supply is generally improving.

For the fiscal year 2024, sales inferred from AI in the data center division accounted for 40%. Strong demand for AI is expected to continue due to the construction of large-scale language models in native languages in all regions except China and AI infrastructure investment by local companies.

Along with this, NVIDIA guided for the next quarter, with revenue of $23.5 to $24.5 billion and a gross profit margin of 75.8 to 76.8%. The revenue is 8-12% higher than the consensus just before the earnings announcement, and the gross profit margin aligns with the guidance.

“Favorable component prices will continue until the next quarter, which will allow for a high gross profit margin,” Kim Lok Ho, a researcher at Hana Securities, predicted. “For the fiscal year 2025, a gross profit margin of mid-70% was suggested, but it will decrease slightly after the second quarter due to the normalization of component prices.”

NVIDIA announced that the H200 will be launched as scheduled in the second quarter. The H200 equipped with HBM3e is expected to have a supply shortage due to strong demand compared to limited supply capacities due to its new model characteristics. It also mentioned that the medium- and long-term growth outlook is positive following the previous quarter.

This is because the transition of demand from general computing to accelerated computing continues due to improvements in data processing costs and speed, and a new type of data center called the AI Factory is trending.

“Despite the heightened expectations, NVIDIA achieved another earnings surprise,” researcher Kim Lok Ho said. “The robust demand for generative AI is confirmed and will be positive for the relevant domestic supply chain.”