Nvidia reported first-quarter results after the bell on Wednesday, with revenue and bottom line beating analysts’ expectations and a better-than-expected outlook for the second quarter.
The leading AI chip maker on Wednesday announced an $80 billion share buyback program as it predicted second-quarter revenue would beat Wall Street expectations.
NVIDIA stock initially fell more than 2% on the news.
The company’s shares fell 0.2% in after-hours trading, but the world’s most valuable company is now expected to have sales of $91 billion, up 2% from the expected $86.84 billion, according to data compiled by LSEG.
Nvidia’s performance is largely considered a barometer of the health of the AI market, as its chips are used in nearly every major data center around the world, powering some of the largest and most advanced AI models.
“NVIDIA has another win, but they continue to win quarter after quarter, so it’s basically priced in at this point,” said eMarketer analyst Jacob Bourne.
“The lingering question is whether they can convince investors that building AI is something that will last through 2027 and 2028, especially as the narrative shifts to inference workloads and competing silicon from Google, Amazon, AMD, and Intel.”
The company also announced an increase in its quarterly cash dividend from 1 cent to 25 cents per share.
Spending on AI infrastructure continues to rise rapidly, with US tech giants such as Alphabet, Amazon, and Microsoft expected to spend more than $700 billion on AI this year, up from about $400 billion in 2025.
Intensifying competition with customer chips:
While both companies rely heavily on Nvidia’s expensive processors, they are also pouring money into developing their own custom chips to run the models, posing a risk to Nvidia’s long-standing dominance of the chip industry.
These chips are aimed at inference (the process by which an AI responds to user queries), which represents a much larger market than training.
Nvidia faces competition not only from Big Tech but also from other chip rivals such as Intel and Advanced Micro Devices, which tout big revenue opportunities from the inference market.
Nvidia moves to defend its position.
The Santa Clara, California-based company is moving to defend its position. In March, the company announced a new central processor and AI system built on technology from Groq, a chip startup specializing in inference.
Colette Kress, Nvidia’s head of finance, said on a quarterly results conference call with financial analysts that Nvidia’s central processor (CPU) market is approximately $200 billion, and that the company “expects total CPU revenue to be close to $20 billion” this fiscal year.
The company is also spending heavily to ensure it doesn’t suffer supply chain failures during the global memory chip shortage. Nvidia said Wednesday that supply in the first quarter rose to $119 billion from $95.2 billion in the previous quarter.
NVIDIA reported first-quarter revenue of $81.62 billion, beating analysts’ average estimate of $78.86 billion, according to data compiled by LSEG.
Data center revenue for the quarter was $75.2 billion, compared to analysts’ average estimate of $72.8 billion.
On an adjusted basis, the company had earnings of $1.87 per share, compared to market expectations of $1.76.
Nvidia also unveiled cloud computing contracts worth $30 billion, up from $27 billion quarter-over-quarter, to support the company’s research and development efforts.
Seaport analyst Jay Goldberg said in a research note last year that such commitments likely represent a “backstop” that Nvidia agrees to pay to cloud computing companies that buy hardware as excess capacity from companies running Nvidia systems.
