Nvidia saw its share price jump more than 25 percent on Thursday morning after the chipmaker reported better-than-expected first-quarter earnings after Wednesday’s market close. While both revenue and net income came in higher than expected, the company still saw revenue decline 13 percent year-over-year, as sales in its important gaming business declined by almost 40 percent compared to the same period last year, reflecting “weaker demand due to the macroeconomic slowdown.” The decline was partially offset by an increase in data center revenue, which grew 14 percent year-over-year mainly thanks to growing demand for generative AI and large language models using Nvidia’s GPUs.
What truly blew analysts away, though, was the company’s second-quarter outlook, as it revealed the full extent to which Nvidia expects the AI boom to boost its business. The chipmaker anticipates Q2 revenue to come in at $11 billion, plus or minus 2 percent, which is more than 50 percent higher than what Wall Street had expected and would represent a 64-percent increase compared to Q2 2023. That would be an impressive return to growth for Nvidia, jumpstarted by the rapid rise of AI tools such as ChatGPT, which require loads of processing power. “The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” Jensen Huang, founder and CEO of Nvidia said in the company’s earnings release.