NVIDIA Beats Q1 Estimates – Is Now the Time to Buy?

NVIDIA (NVDA) released its first-quarter earnings report on last week, and the results were nothing short of impressive. If you’ve yet to buy into the chipmaker’s stock, now may be the time to start seriously considering it.

The company posted revenue of $1.3 billion, a 13% increase year-over-year. Non-GAAP EPS climbed to $0.46, up 39% compared to last year. Analysts were expecting revenue of $1.26 billion with earnings per share of $0.41.

Adding to the company’s positive performance, Jen-Hsun Huang, CEO and co-founder of NVIDIA, says the growth was driven by all the key segments of the business.

In a press release, Huang noted that growth came from all of its platforms, including professional visualization, gaming, auto and datacenter.

But there’s one computing model that’s really driving growth for the company: deep learning. Deep learning uses the GPU’s computing power to learn AI (artificial intelligence) algorithms. Adoption of deep learning is driving up demand for GPUs as its popularity continues to grow in several industries.

In an earning’s call, Huang said NVIDIA is producing GPUs at the highest scale in the industry, pointing to the company’s expertise in production. “This is what we do, this is the one job that we do,” Huang said.

More technology companies are adopting deep learning and leveraging the power of artificial intelligence for machine learning and other similar applications.

GPU sales at NVIDIA were up 15% year-over-year, while sales of its Tegra processors were up by 10%.

Revenue was also up in the company’s largest sector: gaming. Gaming revenue climbed to $687 million, up 17% year-over-year.

Growth was also seen in NVIDIA’s datacenter and automotive segments, with both reaching highs of $143 and $113 respectively.

Net income for the company was up 46% to $196 million. Operating expenses jumped 6%, but was offset by the 39% rise in operating income, up to $245 million.

Looking to the second quarter, NVIDIA is projecting revenue of $1.35 billion. GAAP gross margins are forecasted to stay at 57.5%. Capital expenditure are projected to be between $30 million and $40 million, while operating expenses are expected to reach $500 million.

Huang is confident that NVIDIA’s GPU business is on track for continued growth. “I think at this point, it is pretty clear that it’s going mainstream,” Huang said.

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Daniel Simmons