On the morning of May 25th, Beijing time,$NVIDIA(NVDA.US) released its Q1 2024 financial report (UNuntil April 2023) after the US stock market closed:
Overall performance: stabilizing and starting to recover. This quarter, NVIDIA.US achieved revenue of $7.192 billion, yoy+13.2%. This quarter, NVIDIA's gross profit margin (GAAP) was 64.6%. The gross profit margin has returned to the normal range, indicating that inventory processing has basically been completed. The net profit of this quarter was $2.043 billion, yoy+26.3%.
Core business situation: AI will bring new performance growth. Gaming and Data center account for about 90% of the company's revenue, with Gaming still declining significantly, while Data center is stabilizing and recovering.
This quarter, Gaming declined by 38.1%, and the decline rate has slowed down. Dolphin Analyst believes that the main reason for the continued downturn of the Gaming this quarter is:① The global PC market is still sluggish in the first quarter and there is no sign of recovery;② The price of virtual currency affects mining demand, indirectly affecting the Gaming.
This quarter, Data center increased by 14.2% year-on-year. The macro environment affected the spending of large companies, but the recent growth in demand for AI and large models has brought new additions to Datacenter.
Key financial indicators: expense ratio decreased, driving profit release. NVIDIA's operating expense ratio this quarter fell to 35%. From an absolute value perspective, R&D expenses have also declined compared to the previous quarter. While the inventory side has clearly improved, the company's net inventory decreased by $548 million this quarter, and inventory pressure has basically been relieved.
Next quarter guidance: NVIDIA expects Q2 revenue to be $11 billion (plus or minus 2%), yoy+64%, far exceeding the market's expected $7.155 billion; Q2 gross profit margin is 68.6% (plus or minus 0.5%), far exceeding the market's expected 65.12%, reaching a historical high.
Overall view: NVIDIA's financial report this time is good. This quarter's revenue significantly exceeded market expectations, and the gross profit margin also reached the upper limit of guidance. The inventory situation that the market was concerned about before, the company's inventory decreased by $550 million this quarter, which also means that the company's previous inventory crisis has been completely resolved.
This financial report shows that NVIDIA has already emerged from the trough. NVIDIA's guidance for next quarter's revenue and gross profit margin is $11 billion and 68.6%, respectively. This is not just emerging from the trough, but directly heading towards the peak.Next quarter's revenue is $11 billion, yoy+ 64%, while the gross profit margin is 68.6%, yoy+25.1pct.
Regarding the unexpectedly high guidance for the second quarter, Dolphin Analyst believes that the PC and gaming businesses will still be relatively weak, and the unexpected growth mainly comes from the surge in demand for AI and large language models. Currently, Nvidia has already partnered with Amazon Web Services, Google Cloud, Microsoft Azure, and Oracle Cloud Infrastructure to provide products and services. The demand for computing power in AI and cloud computing from major companies will continue to drive the company's growth.
The future is already here, and Nvidia's strong guidance demonstrates the strong demand for AI and large models. This round of technological revolution may come faster than the market expects. Nvidia, with the world's strongest computing power, will benefit greatly from the AI wave.
Dolphin Analyst believes that the main reasons for the sluggish performance of the gaming business this quarter are:
① The global PC market is still sluggish in the first quarter and there is no sign of recovery. ② The price of virtual currency affects mining demand, indirectly affecting the gaming business.③The impact of dealer hoarding is now minimal. After the inventory turnover in the previous quarters, the inventory pressure on dealers has also improved significantly. The inventory of dealers has little impact on shipments.
Dolphin NVIDIA Historical Articles:
In-depth
February 23, 2023, conference call "Performance has bottomed out and will rebound, AI is the new focus (NVIDIA FY23Q4 conference call)"
February 23, 2023, financial report review "Surviving the cycle disaster, encountering ChatGPT again, NVIDIA's faith returns"
June 6, 2022, "Did the US stock market giant shock kill Apple, Tesla, and NVIDIA?"
February 28, 2022, "NVIDIA: High growth is true, but the cost-effectiveness is still not great"
December 6, 2021, "NVIDIA: Valuation cannot be supported by imagination alone"
September 16, 2021, "[NVIDIA (Part 1): How did the chip giant with a twenty-fold increase in five years come to be?](https://longbridgeapp.com/topics/1152603?invite-code=032064)》
On September 28, 2021, "NVIDIA (Part 2): No More Dual-Drive, Will Davis Double Kill?" was published.
Earnings Season
On November 18, 2022, the conference call for the third quarter of fiscal year 2023 was held, "Can the Continuously Rising Inventory be Digested in the Next Quarter? (NVIDIA FY2023Q3 Conference Call)".
On November 18, 2022, the earnings report review was published, "NVIDIA: Profit Cut by Two-Thirds, When Will the Turning Point Come?".
On August 25, 2022, the conference call for the second quarter of fiscal year 2023 was held, "How Does Management Explain the Gross Margin of the 'Flash Crash'? (NVIDIA FY2023Q2 Conference Call)".
On August 25, 2022, the earnings report review was published, "Is NVIDIA, Stuck in the Mud, Going to Retrace 2018?".
On August 8, 2022, the earnings forecast review was published, "Thunderous, NVIDIA's Performance in Free Fall".
On May 26, 2022, the conference call was held, "The Combination of Epidemic and Lockdown, Gaming Decline Dragged Down Second Quarter Performance (NVIDIA Conference Call)".
On May 26, 2022, the earnings report review was published, "The 'Epidemic Fat' is Gone, NVIDIA's Performance is Disfigured".
On February 17, 2022, the conference call was held, "NVIDIA: Multi-Chip Advancement, Data Center Becomes Company Focus (Conference Call Summary)".
On February 17, 2022, the earnings report review was published, "NVIDIA: Hidden Worries Behind the Super-Expected Performance | Reading Financial Reports".
On November 18, 2021, the conference call was held, "How Does NVIDIA Build the Metaverse? Management: Focus on Omniverse (NVIDIA Conference Call)".2021-11-18 Financial Report Review "Can Nvidia Keep Being Bullish with Computing Power and Metaverse Boost?"
Live Broadcasts
May 26, 2022 "Nvidia Corporation (NVDA.US) Q1 FY2023 Earnings Call"
February 17, 2022 "Nvidia Corporation (NVDA.US) Q4 FY2021 Earnings Call"
November 18, 2021 "Nvidia Corporation (NVDA.US) Q3 FY2022 Earnings Call"
Risk disclosure and statement for this article: Dolphin Analyst Disclaimer and General Disclosure
