Ongoing AI-boom still has legs
- Resounding beat on Q4FY24 results and Q1FY25 guidance
- Data center as key outperformer, record revenue of US$18.4bn, +27% q-o-q
- Robust demand for AI-chips globally more than offset impact of China’s ban
Nvidia delivered another set of solid results and guidance, living up as the world’s most valuable chipmaker, and underscoring the fact that the ongoing AI boom still have legs. Q4FY24 results handily surpassed analysts’ expectations, with revenue coming at US$22.1bn (est. US$20.4bn) and EPS US$5.16 (est. US$4.60). Data center remains as the key driver, with record revenue of US$18.4bn (+27% q-o-q) or c.83% revenue contribution; gaming revenue at US$2.9bn (flat q-o-q, +56% y-o-y) has also stabilized ostensibly on PC industry recovery. Management continues to expect a robust demand for AI-chips, with above expectations revenue guidance for Q1FY25 at US$24bn, which is well above analysts’ estimate for US$21.9bn.
Capitalizing, extending the lead in the AI-chips market. Nvidia’s unparalleled market-leading position and financial performance re-affirm our positive stance on this stock. First, there appears to be scope for the potential/demand of AI-chips to surprise further on the upside; as Nvidia’s 1QFY25 revenue guidance of US$24bn well surpassed that of analysts’ expectations at US$21.9bn. Second, performance continues to be underpinned by the robust AI-chips orders globally, which had more than offset the shortfall induced by the expanded US export curbs – contribution from China fell from 20-25% to “mid-single-digit percentage” in Q4FY24. Third, Nvidia continues to have an upper hand in pricing power, with strong non-GAAP gross margins guided at 77% in 1QFY25 (vs. 76.7% in 4QFY24). Upcoming H200 rollout and scaled-down Made-for-China chips in the coming quarter(s) are further efforts to extend its lead. Maintain BUY with TP US$784.60.