Shares of Nvidia gained as much as 15% in early Thursday trading after the chipmaker announced quarterly earnings on Wednesday that beat analysts expectations and rival Intel slashed its quarterly dividend.
Nvidia is on pace for its largest percent increase since March 24, 2020, when it rose 17.16%.
"As one of the architects behind ChatGPT it's seen activity around its AI offer go through the roof in the last couple of months," said Susannah Streeter, head of Money and Markets at Hargreaves Lansdown.
"It’s now offering its services like access to supercomputers, via big cloud platforms like Microsoft Azure, Google GCP and Oracle Cloud Infrastructure. By opening up a new funnel of sales, it is likely over time to more than offset a decline in revenue from selling processing units to the gaming industry," Streeter added.
On Wednesday the world's larges supplier of semiconductors used in data centers reported adjusted earnings per share of 88 cents on revenue of $6.05 billion for the January quarter, beating analysts’ predictions of 81 cents a share on $6.02 billion in revenue, according to FactSet.
Revenue did fall 21% from a year ago while net income dropped 53% to $1.4 billion.
Intel also gave a forecast range with $6.5 billion at the midpoint for this quarter, exceedinig Wall Street’s $6.31 billion consensus.
"Chip giant Nvidia brought some relief to the tech sector after beating market expectations with quarterly results," said Russ Mould, investment director at AJ Bell.
"It’s been ages wince we’ve had a real buzzword in the tech space and the chatbot has certainly taken the world by storm in a very short period of time. Nvidia stands to benefit as its chips are used to develop machine learning software," Mould opined.
Fiscal-year revenue peaked at $27 billion, while quarterly and annual return to shareholders reached $1.15 billion and $10.44 billion, respectively.
Intel's dividend cut
Nvidia’s upbeat earnings came the same day Intel's board of directors cut its quarterly dividend to support what the company calls "critical investments" in a volatile economy.
The largest U.S. chipmaker said it will cut its quarterly dividend to $0.125 per common share to be payable to stockholders on June 1, 2023, and to stockholders of record on May 7, 2023.
Intel said the decision to decrease the quarterly dividend reflects the board’s deliberate approach to capital allocation and is designed to create long-term value.
Intel also reaffirmed its first-quarter 2023 business outlook provided at its most recent earnings call, including revenue of between $10.5 billion and $11.5 billion and earnings per share of $(0.80) on a GAAP basis and $(0.15) on a non-GAAP basis.