This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

Chipmaker NVIDIA Corporation reported its earnings for the first quarter of the fiscal year 2024 earlier today. Compared to the bloodbath that NVIDIA's Q4 2023 was, the previous quarter was relatively stable, and crucially, it marked a sequential growth for all of the firm's primary business divisions. The quarter was a massive success for NVIDIA, whose revenue during the three-month period stood at $7.1 billion, and earnings per share came out at $1.08 - with the latter being a massive beat over the consensus estimates of $0.92. Riding the ongoing artificial intelligence wave, NVIDIA's chief executive officer Mr. Jen-Hsun Huang was eager to mention a trillion-dollar opportunity from data centers shifting to artificial intelligence platforms.

NVIDIA Grows Revenue By 19% Sequentially, Beating Analyst Estimates By Whopping 11%

As usual, the show's star was NVIDIA's data center segment. NVIDIA and AMD have both seen their income statements shift from relying on gaming and consumer products for growth to data centers, especially over last year when high inflation had a stronger impact on consumer spending. This has seen their data center segments become the largest business segment, and Q1 2024 was no exception for NVIDIA.

The data center segment was NVIDIA's only business division that marked a robust annual growth and the only one with over a billion dollars in revenue to do so. It earned NVIDIA $4.2 billion in revenue from it in the quarter, for an approximately 14% annual growth over the year ago quarter's $3.7 billion in revenue. The annual growth in revenue for data center also broadly outpaced NVIDIA's annual revenue drop of 13%. This growth was driven by various big business wins, including those from Google and Dell.

However, purely in terms of sequential growth, gaming takes the crown. NVIDIA's long-time bread and butter business division posted $2.2 billion in revenue during the quarter. While this was still down a massive 38% annually, the revenue grew by 22% over the quarter, indicating that a potential turnaround is just around the corner.

NVIDIA's revenue breakdown for the first quarter of fiscal 2024. Image: NVIDIA Corporation

NVIDIA's chief financial officer Ms. Collette Kress attributes a large portion of the growth in data center revenue to the ramp-up in demand for generative artificial intelligence products. As part of her commentary, the executive stated that NVIDIA's Hopper and Ampere products lead the way in this highly growing business segment. On the gaming results, Ms. Kress explained that macroeconomic conditions induced an annual slowdown, but NVIDIA's RTX 40 graphics processing units contributed to the revenue growth during the first quarter.

The bit about generative AI was all that the firm's CEO, Mr. Huang, could talk about, with his prepared remarks stating:

The computer industry is going through two simultaneous transitions — accelerated computing and generative AI. A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process. Our entire data center family of products — H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU — is in production. We are significantly increasing our supply to meet surging demand for them.

NVIDIA's inventory dropped while its accounts receivable grew during the quarter, indicating that the firm is easing through some of the channel pressures that have plagued it for the past few quarters. Higher sales also led to cash flow growth, but Ms. Kress refrained from providing any details about the changes in inventory or receivables.

NVIDIA forecasts $11 billion in revenue for the current quarter to mark a potential first annual growth in three quarters. This guidance is also significantly above Wall Street's guidance of $7.2 billion, indicating that perhaps the light at the end of the tunnel is approaching fast. The market also appears to be cognizant of this fact, with NVIDIA's shares up by 27.71% at the time of publishing.