Chip designer NVIDIA Corporation released its highly anticipated second quarter of fiscal year 2024 earnings earlier today. The results saw NVIDIA's data center segment fire on full cylinders and more than double the sales over the year-ago quarter, cementing its new role as the company's bread and butter division. NVIDIA's former high earner, its gaming division, has been on the backfoot lately as a slowdown in the personal computing market has hit consumer budgets. In the second quarter, the segment posted a modest 21.7% annual growth indicating that perhaps the downturn in the industry that has plagued firms for more than a year now might be nearing its end.
NVIDIA Chief Boasts About "New Computing Era" As Share Price Soars To Record High
Before today's earnings release, NVIDIA's shares had started to soar as numerous Wall Street analysts came forward with their projects for the firm's future. However, the stock pared back some of these gains a day before, as a few potential investors booked in profits and became wary of the costly impact of an earnings miss.
NVIDIA did not miss estimates; in fact, it blew its own guidance out of the part by reporting a whopping $13.5 billion in revenue to mark an 88% sequential and 101% annual growth. Effectively, the firm doubled its revenue over the year-ago quarter, and this strong performance comes purely from the data center division.
Out of the $13.5 billion in revenue for the quarter, data centers accounted for $10.3 billion in sales, making the company more of an enterprise products provider than a GPU provider. Naturally, growth in the data center division outpaced broader annual and sequential revenue growth, as the figures grew by 141% sequentially and 171% annually.
Demand from internet and cloud computing firms pushed the data center sales to record high levels. Within the segment, data center computing led the growth as its sales grew by 195% annually.
NVIDIA's chief financial officer described the data center performance as part of the customer CFO report, which stated:
Data Center revenue was a record, up 171% from a year ago and up 141% sequentially, led by cloud service providers and large consumer internet companies. Strong demand for the NVIDIA HGX platform based on our Hopper and Ampere GPU architectures was primarily driven by the development of large language models and generative AI. Data Center Compute grew 195% from a year ago and 157% sequentially, largely reflecting the strong ramp of our Hopper-based HGX platform. Networking was up 94% from a year ago and up 85% sequentially, primarily on strong growth in InfiniBand infrastructure to support our HGX platform.
NVIDIA revenue and the earnings per share (EPS) of $2.70 both beat analyst estimates by a wide margin, and the firm added the proverbial cherry on top by providing a stunning $16 billion in outlook for the current quarter. If achieved, this would mark a 170% annual growth and place NVIDIA in an entirely new league regarding revenue. The $16 billion in guidance also shes the $12.61 in guidance analysts polled by Refinitiv had penned in for the previous quarter.
The significantly higher revenue in Q2 also came with a 2x growth in NVIDIA's accounts receivable. This account measures the payments the firm has to receive from its customers, and for the previous quarter, the value stood at $7 billion, whereas in Q1, it had stood at $4 billion. Additionally, the time that it takes for NVIDIA to collect payment has dropped by four days this quarter, currently sitting at 48 days.
Finally, it also appears that NVIDIA is looking to cement its recent share price gains by expanding its share buyback program. The firm has announced a $25 billion addition to its share buybacks, and the stock is up by 9% in aftermarket trading as it trades at $513.
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