Nvidia (NVDA.US) released a report that notably exceeded Wall Street’s forecasts in terms of revenue and earnings per share. There was a marked increase in revenue from the Data Center (AI) division, and the outlook presented was notably optimistic.

Consequently, the company’s shares surged by almost 6% post the Wall Street trading session, nearing the significant $500 per share threshold.

Financial highlights

• Revenues: $13.51 billion vs. $11.04 billion forecast and $6.7 billion in Q2 2022 (101% y/y growth)
• Earnings per share (EPS): $2.7 vs. $2.07 forecast and $0.51 in Q2 2022
• Data center revenues: $10.32 billion vs. $7.99 billion forecasts and $4.28 billion in Q1 (171% y/y increase)
• Gaming revenues: $2.49 billion vs. $2.38 billion forecast (24% y/y growth)
• Professional Visualization revenues: $379 million vs. $318 million forecast (24% decrease y/y)
• Automotive revenue: $253 million vs. $309.4 million forecasts (15% increase y/y)
• Adjusted gross margin: 71.2% vs. estimated 70% (45.9% increase y/y)
• Company estimates Q3 revenue at $16 billion with 2% variance with forecasts consensus of $12.5 billion
• The board of directors approved an additional $25 billion for share buybacks, which Nvidia plans to continue in the current fiscal year. In Q2, it repurchased 7.5 million shares for $3.28 billion (easing market concerns somewhat around recent share sales by some company affiliates and the company’s ‘overvaluation’ after ‘astronomical’ increases)

The outcomes profoundly surpassed what analysts had predicted, underscoring the immense ongoing demand for AI solutions. The surge in data center revenue primarily came from significant Internet corporations and cloud service providers.

Year-over-year, data center computing performance saw an impressive 195% growth, and a staggering 157% increase quarter-over-quarter, largely attributed to the Hopper chip architecture.

Nvidia’s escalating computational strength solidifies its role as a principal player in the AI evolution. Looking ahead, its dominance seems uncontested, with no rival in sight that could challenge its standing.

The company’s impressive performance in the gaming segment can be largely attributed to its RTX 40-series graphics cards.

While the automotive results deviated from predictions primarily due to a downturn in China, there was a year-over-year increase, credited to the uptick in sales of autonomous driving models.

Nonetheless, the spotlight remains on the Data Center outcomes, which utterly astounded Wall Street predictions. These figures not only surprised the market but even left analysts, who had optimistic projections, taken aback.

Revenue for the third quarter is anticipated to reach $16 billion, surpassing even the highest estimations of $15 billion. The forecasted gross margins stand at an impressive 71.5% (non-GAAP).

“A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and CEO of NVIDIA.

“NVIDIA GPUs connected by our Mellanox networking and switch technologies and running our CUDA AI software stack make up the computing infrastructure of generative AI.

“During the quarter, major cloud service providers announced massive NVIDIA H100 AI infrastructures. Leading enterprise IT system and software providers announced partnerships to bring NVIDIA AI to every industry. The race is on to adopt generative AI,” he said.