Nvidia Shares Soar 8.43% After Stellar Earnings

Chip stocks soared in out-of-hours trading on Wednesday and Thursday after chipmaker Nvidia ( NVDA ) smashed Wall Street's expectations with its latest earnings report, continuing a period of extraordinary growth as booming interest in artificial intelligence propels the tech sector to new heights. Shares for Nvidia ( NVDA ) climbed nearly 8% during after-hours trading on Wednesday, peaking above $1,000 per share for the first time. While these gains have pared a little in the hours since Nvidia’s earnings report, shares for the California-based company were still up by more than 6% at the time of writing on Thursday morning.

Nvidia ( NVDA ) shares are currently trading at around $1,030, putting the chipmaker on track to surpass the $1,000 milestone and hit an all-time high when markets open on Thursday. Other chipmakers benefiting from intense interest in artificial intelligence include shares for Taiwan Semiconductor Manufacturing Company, Arm Holdings, Dell Technologies, and Super Micro Computer Inc., which were all up between 3% and 6% during pre-market trading.

Nvidia ( NVDA ) released its hotly anticipated earnings report for the first quarter of 2024 on Wednesday afternoon, which smashed Wall Street’s expectations and marked the company’s most profitable quarter ever. Respectively, profits and sales were up 628% and 268% compared to the same time period last year, Nvidia ( NVDA ) said, reporting $6.12 earnings per share and $26 billion in sales for the three-month period ending April 30.

The release of OpenAI’s generative AI chatbot ChatGPT in 2022 ignited a global race among tech companies to build and deploy ever more advanced AI systems. The race has spurred stellar demand for the kinds of advanced computer chips required to maintain, run, and develop these AI systems, and Nvidia, formerly known for its gaming hardware, is one of the world’s leading beneficiaries for this demand and has become a bellwether for interest in the sector.

Nvidia's profit soars, underscoring its dominance in chips for artificial intelligence. Its net income rose more than sevenfold compared to a year earlier, jumping to $14.88 billion in its first quarter that ended April 28 from $2.04 billion a year earlier. Revenue more than tripled, rising to $26.04 billion from $7.19 billion in the previous year.

Technical Outlook
Nvidia's (NVDA) stock is up 8.97% in Thursday's market trading riding high with a Relative Strength Index (RSI) of 71.60 placing NVDA in an overbought territory, hence a trend reversal is along the horizon in the long term.