Nvidia
Another factor was the semiconductor shortage. On secondary markets, new Nvidia chips are being sold at a premium due to insatiable demand and production delays. Overall, the company continues to grow its market share, while the overall industry expands as well.
Inside the Numbers
In Q1, Nvidia reported $3.66 in earnings per share, topping analyst's expectations of $3.28 per share. Revenue also came in better than expected at $5.7 billion vs $5.4 billion consensus.
Nvidia is one of the leaders in semiconductors as the industry is in a boom period with a strong video game, pc, and server sales. Further, the company is well-positioned in industries of the future like AI, cloud computing, machine learning, autonomous driving, VR, and cryptocurrencies. In Q2, the company forecasts $6.3 billion of revenue which would be a 62% increase from last year.
Graphics is its largest segment and contributed $3.5 billion in revenue, an 81% increase from last year. Gaming revenue was 106% higher to $2.8 billion. Sales to data centers accounted for $2.2 billion, an 88% increase from last year.
The company did note some supply chain issues as many of its products quickly sell out and are on backorder at retailers. One factor is the insatiable demand from crypto miners, so the company has been trying to modify the chips so they can't work for that purpose. And, it's releasing a new line of dedicated cryptocurrency chips. In the latest quarter, this accounted for $155 million in sales, and the company expects $400 million next quarter.
Stock Price Outlook
The company also said it's on track to close its purchase of ARM by the end of next year. Of course, the deal remains contentious with many other chip companies looking to fight it. The company also announced a 4:1 stock split.
Nvidia's stock was an outperformer for most of 2020 but has taken a breather this year. Since August of last year, it's basically been range-bound. However, in recent weeks it's started to perk up and approach its old highs. Given these strong results, NVDA's valuation has become quite attractive and the company remains in a leading position in today's best industries and is well-positioned in tomorrow's as well.
