Nvidia reports stratospheric growth as AI boom shows no sign of stopping

On Wednesday, Nvidia declared a historic quarterly revenue mainly attributed to the surge in demand for artificial intelligence by corporations.

According to Nvidia's founder and CEO, Jensen Huang, companies and countries have formed partnerships to bring about a new product - artificial intelligence, which signals the start of the next industrial revolution.

The business earned $26 billion in sales during the first part of the financial year 2025, which is a growth of 18% compared to the previous quarter and a whopping 262% compared to last year. The company's net earnings rose to $14.88 billion, which is a significant improvement from the $2 billion earned the previous year.

The company that manufactures AI chips, which is seen as a sign of how the AI revolution is progressing, said that its earnings per share had increased by 21% from the last quarter and by a staggering 629% from last year. The company was expected to earn $24.65bn in revenue and have earnings per share of $5.59, according to CNBC. Furthermore, the company will split its stock on June 7th, with a rate of 10-for-one for its current stock, which is being traded at $962.

Before the financial results were released, investors were hoping for great results, and they were also looking forward to seeing whether big tech companies were using Nvidia’s chips as much as they expected. It turns out that the spending on Nvidia’s chips was indeed impressive.

Once more, Nvidia remains on top as AI firms worldwide rely heavily on its chips, network hardware and software system, according to Jacob Bourne, an eMarketer analyst.

According to Bourne, the technological giants' open admiration for Nvidia is a clear indication of its supremacy. He also mentioned that they aspire to diminish their reliance on the company; however, they acknowledge that they have not yet attained their objective.

Some of the biggest tech companies, like Amazon, Google, Meta, and Microsoft, have announced their plans to allocate $200 billion for the procurement of chips and data centers necessary to train and run their artificial intelligence systems. Meanwhile, Apple has not yet disclosed its plans for AI but is anticipated to release a statement concerning its AI strategy next month. Out of all the chip providers available, Nvidia is believed to be the leading supplier, being the most competent in developing chips specifically tailored for powering artificial intelligence algorithms.

This year, the company's value has increased by over $1.1tn. In 2022, Nvidia was valued at $359bn, but now, in the middle of 2024, it is valued at $2.33tn. This is currently only $500bn less than Apple and $900bn less than Microsoft, which are the two most valuable companies in the United States.

Deutsche Bank strategist Henry Allen stated that the chipmaker's earnings announcement has become a significant event on the macro calendar.

Experts are cautioning that no company's stock can keep rising without any dips for an indefinite period of time. The P/E ratio of Nvidia is currently an astounding 79.95-to-one, which is considerably higher than Microsoft's ratio of 36 and Apple's ratio of 29. However, Nvidia's net income bottom line is impressive, with them earning about $0.50 for every dollar in sales.

Is the supply enough? Nvidia's chips are currently in high demand and need to be transported by an armored car. On Tuesday, their stocks went down by 5% as Amazon, one of their big clients, mentioned to the Financial Times that they were still waiting for their orders of Nvidia's latest superchip, Blackwell.

Another issue to consider is China. The Biden administration has tightened regulations on electric vehicles manufactured in China, which has resulted in the company being unable to sell its most advanced semiconductors in the Chinese market.

According to Dan Ives, a representative from Wedbush Securities, investors are eagerly anticipating the speech of Jensen, who is considered the "godfather" of AI, following the release of the results. Ives believes that the AI industry's evolution is originating from Nvidia, and he is convinced that the AI "festivities" are still in their early stages, with excitement building up in preparation for what is to come.