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28 May 2021

Nvidia Goes from Strength-to-Strength

Nvidia, the multinational technology company that designs graphics processing units (GPUs) for gaming and data centres, as well as system-on-a-chip units (SoCs) for the mobile computing and automotive market, reported record earnings for the first quarter of 2021 amid a global chip shortage which is driving demand for its business.

Net income for the period came in at US$1.91bn, or US$3.03 a share, compared with US$917m, or US$1.47 a share, in the same period last year. The high level of net income is reflective of Nvidia’s lucrative margins, as gross profit margins for this quarter remained strong at 64.1%, only down 1% from the same period last year.
Overall revenue soared to a record US$5.66bn, an increase of 84% from US$3.08bn in the same quarter last year. A key contributor to the rise in revenue came from its GPU segment, which supplies vital graphics cards for gaming consoles, artificial intelligence, cryptocurrency mining and other technologies. Graphics sales rose 81% year-over-year (YoY) to US$3.45bn, with gaming products equating to US$2.76bn of the segment’s revenue. The increased demand for GPUs has been attributed to rising purchases from gamers and students, while the ongoing supply constraints further drive demand. Revenue for Nvidia’s other major business segment, computing and networking, also saw an exceptional rise with an 88% YoY jump in sales to US$2.21bn. Nvidia’s acquisition of Mellanox, a data centre company, has helped growth in this segment and added to its vast list of products across areas such as gaming, cloud computing, AI, robotics, self-driving cars, and genomics and computational biology. The company appears set to continue consistent levels of top and bottom-line growth over the next few years. For the current quarter, Nvidia expects US$6.30bn in revenue, which would be a 62% increase over last year.

The company also confirmed a four-for-one split of Nvidia’s common stock, payable as a stock dividend, which is expected to be distributed on July 19th, 2021.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
 
Nvidia Goes from Strength-to-Strength
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