Nvidia Reports Strong Q1 Earnings Amid AI Growth
Nvidia (NASDAQ: NVDA) released its first-quarter earnings on Wednesday, showcasing robust performance. Revenue surged 69% year-over-year to $44.1 billion, surpassing expectations of $43.3 billion. Notably, data center revenue soared 73% to $39.1 billion, highlighting the company’s pivotal role in the AI sector.
Adjusted gross margin, accounting for a $4.5 billion write-down related to H20 chips intended for China, stood at 71.3%. The adjusted earnings per share (EPS) was reported at $0.81, exceeding forecasts. Without the H20 charge, Nvidia would have achieved an adjusted EPS of $0.96.
Nvidia’s Revenue Outlook and Stock Performance
Looking forward, Nvidia forecasts $45 billion in revenue for the second quarter, which is $8 billion lower than it would be without chip export restrictions. Following the earnings report, Nvidia’s stock rose 4.9% in after-hours trading. Conversely, CoreWeave (NASDAQ: CRWV), another AI stock, outperformed Nvidia with a 5.6% increase.
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CoreWeave’s Growth and Nvidia’s Investment
CoreWeave specializes in generative AI-focused cloud computing, allowing rental of AI computing power primarily built on Nvidia technology. Nvidia is both a major customer and investor in CoreWeave. Following Nvidia’s stake disclosure in May, CoreWeave’s stock rose, with Nvidia holding 24.2 million shares valued at over $2.5 billion.
CoreWeave’s market cap is significantly smaller at $60 billion, leading to higher volatility. Despite recording a net loss of $314.6 million in its first public quarter, revenue skyrocketed by 420% to $981.6 million, showcasing potential profitability in adjusted operating income, which rose to $162.6 million.
Future Prospects for CoreWeave and Nvidia
While Nvidia dominates the AI hardware market, its growth prospects may be limited due to its large market cap of $3.3 trillion. Investors are increasingly interested in CoreWeave’s lesser-known potential as it navigates its new public status amidst strong AI demand.
The recent earnings report from Nvidia underscores continued strong demand for AI infrastructure, hinting at further growth for both companies. If investors are optimistic about Nvidia’s future, CoreWeave may represent a strategic addition to their portfolios.
Investment Considerations for CoreWeave
Before investing in CoreWeave, it is essential to evaluate its fundamentals. Currently, it is not highlighted among the top stocks recommended by analysts, raising questions about its long-term profitability despite its impressive growth metrics.
Investors should be cautious, given the risks associated with newer stocks like CoreWeave where business models continue to evolve. Tracking Nvidia’s performance may provide insights into the broader AI landscape and CoreWeave’s future trajectory.
Jeremy Bowman has positions in Nvidia. The views expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.
