To The Moon

$NVIDIA Corp(NVDA)$ reported its financial results for the first quarter of fiscal year 2025 after the U.S. stock market closed on May 23rd, Beijing time (as of April 2024)

1. Overall Performance: Revenue and Gross Margin Reach New Heights. NVIDIA achieved a revenue of 26.04B usd, an YoY increase of 262%. The company also achieved a gross margin (GAAP) of 78.4%, exceeding market expectations (76.6%). The record high gross margin was mainly driven by the strong performance of the data center business, which has lifted the overall gross margin. The net profit for this quarter was $14.9 billion, a 628% year-over-year increase, marking another historical high.

2. Core Business Update: Data Center Business Continues to Grow. The data center business accounted for 85.6% of the company's revenue, making it the most core business at present.

   1. The gaming business grew by 18.2% year-over-year this quarter, with a slowdown in the recovery. It is believed that the slowdown in the gaming business this quarter is mainly due to the lack of a significant and sustained demand downstream. Combined with the global PC market, shipments fell below 60 million units again this quarter. Although it has recovered from the bottom, it has fallen again on a quarter-over-quarter basis.

   2. The data center business grew by 426.7% year-over-year this quarter, setting a new record high, mainly driven by the strong demand for large models, recommendation engines, and generative AI.

3. Key Financial Indicators: Low Expense Ratio Maintained. NVIDIA's operating expense ratio continued to decline to a low of 13.4% this quarter. This is mainly due to the surge in revenue, which has significantly reduced the proportion of expenses. The inventory ratio is also at a historical low, indicating that the company's products are still in short supply.

4. Guidance for the Next Quarter: NVIDIA expects revenue of 28𝑏𝑖𝑙𝑙𝑖𝑜𝑛(𝑝𝑙𝑢𝑠𝑜𝑟𝑚𝑖𝑛𝑢𝑠228billion(plusorminus226.8 billion; the gross margin for the second quarter is expected to be 74.8% (plus or minus 0.5%), slightly below market expectations of 75.2%.

Overall, NVIDIA has once again delivered impressive results. The company's revenue and gross margin have reached historical highs this quarter. The better-than-expected performance is mainly due to the strong pull of the data center business. With leading product capabilities, NVIDIA's performance shows a clear alpha. Even if peers (AMD and Intel) have mediocre data this quarter, it does not affect NVIDIA's continued high growth.

In combination with the company's guidance for the next quarter, the revenue for the second quarter is expected to be $28 billion (plus or minus 2%) and the gross margin is expected to be 74.8% (plus or minus 0.5%). The company will start shipping Blackwell in the second quarter, which will continue to drive the company's revenue growth with new products. As for the gross margin, although the company has not given a higher guidance, it is still maintained at a high level of around 75%, which is also good.

At present, the company has fully focused on the data center business, and the revenue ratio has also increased to about 85%. The company's continued growth is mainly due to its leading technology and continuous product iteration. The company basically launches new products every year to maintain its leading competitiveness.

From the capital expenditure of major technology manufacturers, $Microsoft(MSFT)$ , $Alphabet(GOOG)$ , $Amazon.com(AMZN)$ , and others are increasing their capital expenditure, and the demand for the entire data center and AI is increasing. Different from the weak data of $Advanced Micro Devices(AMD)$ and $Intel(INTC)$ , NVIDIA continues to maintain high growth. This is mainly due to the continuous leading product capabilities, NVIDIA has won the largest part of the capital expenditure in the AI chip field of large factories.

Although NVIDIA's stock price has risen several times from the bottom, the company's performance can fully support the current stock price. Now the company announced a 1-for-10 stock split in June to reduce the investment threshold, which is expected to further drive the company's trading volume. With leading computing power and product iteration capabilities, NVIDIA will firmly hold the top position in AI chips.