Nvidia Stock Jumps 9% as Surging AI Chip Demand Sends Earnings Soaring—Key Level to Watch

NVIDIA Corporation

Shares in Nvidia (NVDA) jumped more than 9% in Wednesday’s extended-hours trading session after the graphics processor maker delivered a quarterly earnings report that blew past Wall Street estimates and issued a rosy revenue outlook for the current quarter amid robust demand for its AI chips.

The Santa Clara, California company reported fiscal fourth-quarter revenue of $22.10 billion, up from $6.05 billion a year earlier, while diluted earnings per share came in at $4.93, versus 57 cents. The top and bottom line numbers both handily beat analysts’ expectations.

Revenue growth was fueled by strong sales of Nvidia’s AI server chips, such as the H100—a fourth generation graphics processing unit (GPU) that can train AI language models four times faster than previous chips. The Magnificent Seven member houses its AI chip sales in its Data Center business, which reported impressive year-over-year revenue growth of 409% in the period.

Despite, the division’s five-fold sales expansion, the company said its revenue was curbed by recent U.S. restrictions on AI chip exports to China. “We understood what the restrictions are, reconfigured our products in a way that is not software hackable in any way, and that took some time so we reset our product offering to China,” Nvidia CEO Jensen Huang said.

Looking ahead, the company guided first-quarter sales of $24.0 billion, comfortably ahead of the Street estimate pegged at $22.17 billion. Huang told analysts that “fundamentally, the conditions are excellent for continued growth.” He said he expects sales to be underpinned by generative AI and a pivot from central processors to accelerators that the company produces. Nvidia also said it anticipates to ship its highly anticipated B100 chip later this year but expects it to be in short supply due to excessive demand.

NVDA shares broke above a six-month period of consolidation in early January before trending higher into uncharted territory. More recently, the stock has backed away from the record closing high of $739.00 set last week but still traded significantly above the 50-day moving average leading into the company’s earnings release. Amid further upside, investors should monitor how the price responds to the stock’s all-time high. A close above this closely-watched area could drive further bullish momentum, while a rejection could act as a catalyst for profit taking.

Nvidia shares gained 9.1% to $735.95 in after-hours trading Wednesday.

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