Nvidia’s Stock Surges 82.5% in First Quarter of 2024: Factors Behind the Rise of the Leading AI Company

Nvidia’s Stock Surges 82.5% in First Quarter of 2024: Factors Behind the Rise of the Leading AI Company

Nvidia (NASDAQ:NVDA) The stock soared 82.5% in the first quarter of 2024. (The market quarter ended Thursday, with U.S. financial markets closed Friday for the Good Friday holiday.) That performance made the chip leader d artificial intelligence (AI) the second best performer. on the S&P500 index finger, behind only Super microcomputerserver specialist which also benefits from strong demand for AI products and services.

As a reminder, in the first quarter, the S&P 500 index gained 10.2% and reached an all-time closing high on Thursday, while the technology-heavy index Nasdaq Composite the index gained 9.1%.

The main catalyst for Nvidia stock: AI, particularly generative AI

The main catalyst for Nvidia stock’s incredible performance so far in 2024 can be summed up in two words: artificial intelligence. More precisely, it is Generative AI, which has significantly expanded the potential applications of AI. This technology allows users to quickly generate new content of different types based on various input categories, such as images and sounds.

Generative AI captivated the tech world in November 2022 when OpenAI widely launched ChatGPT. The popularity of this chatbot has skyrocketed, causing a frenzy among businesses and other entities to obtain generative AI capabilities.

Nvidia Data Center: Its Main Platform Benefits from Strong Demand for AI Capabilities

Nvidia’s data center platform is the primary beneficiary of the strong demand for entities of all types to acquire generative AI capabilities. The data center is Nvidia’s largest platform, accounting for 83% of its total revenue in the quarter ended January 28. This business has seen tremendous growth, as we will see below.

Graphics processing units (GPUs) in Nvidia’s data centers accelerate the processing of AI and high-performance computing workloads. The company’s current flagship data center GPU is the H100, and its next GPU based on the Hopper architecture, the H200, is expected to begin shipping in the second quarter of this year. Its data center GPUs based on its next-generation architecture, Blackwell, promise a huge leap in performance and are expected to launch later this year.

Nvidia stock entered 2024 with momentum

In 2023, Nvidia stock soared 239%, giving it second place among the best performers in the S&P 500 index. (Super Micro Computer was the best performer with a gain of 246%.) For Recall, the S&P 500 and Nasdaq Composite returned 26.3% and 44.6%, respectively, last year.

Nvidia’s stock momentum in late 2023 and through the end of February 2024 was driven by the company’s release of blockbuster quarterly results on November 23, 2023. During its third quarter of fiscal 2024 (ending 29 October 2023), revenue and adjusted earnings per share (EPS) jumped 206% and 593%, respectively, year over year. The growth was fueled by data center platform revenue which soared 279% from last year.

From 2024 through February 21 (when the company reported its next set of quarterly results), Nvidia stock gained 36.2%.

Nvidia stock benefited from the publication of quarterly results on February 21.

On February 21, Nvidia released its report for its fourth quarter of fiscal 2024 (ended January 28). This is another blockbuster report, fueled by the phenomenal growth of the data center platform, driven by AI.

For the quarter ended January 28, Nvidia’s revenue and adjusted EPS climbed 265% and 486% year-over-year, respectively. Both results far exceeded Wall Street estimates. The growth was driven by the 409% increase in data center platform revenue. Gaming and professional viewing platforms also performed well, with revenues up 56% and 105%, respectively, year-over-year.

Investors propelled shares up 16.4% the day after the earnings release, and the stock continued to rise through the end of the first quarter of 2024.

Nvidia is poised for phenomenal new growth

Nvidia is about to release another fantastic quarterly report. For the period ending at the end of April, management forecast revenue growth of 234% and adjusted EPS to increase 396% year over year.

The AI ​​revolution is only just beginning, so Nvidia has potentially very long growth potential. It’s not too late to consider buying Nvidia stock.

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Beth McKenna has positions at Nvidia. The Motley Fool Ranks and Recommends Nvidia. The Motley Fool has a disclosure policy.

Nvidia stock soared 82.5% in Q1 2024: Here’s what drove the leading AI stock was originally published by The Motley Fool

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