Nvidia (NASDAQ:NVDA) reported stellar Q1 performance with revenues of $3.2B, well above guidance of $2.9B. GAAP gross margin was an enviable 64.5% reflecting a favorable mix shift toward higher ASP platforms in the GPU segment. Gross margins and profitability were also well ahead of expectations.
Datacenter segment, a darling of investors, continues to grow very rapidly. Nvidia’s Volta has been shipping to vast majority of customers last quarter but was used internally. Now, Nvidia customers are opening up services based on Volta to their external customers. Management claimed that three major segments are driving the Company: training, inference, and high-performance computing. Management claims that there are a million developers around the world working on Nvidia platforms and that number is growing. The Company claims that the inference business doubled quarter over quarter and that training business is limited by number of available AI software engineers. All in all, datacenter continues to be a major success story for the Company.
By all financial metrics, the quarter was a superlative one. Gross margin, in particular, is at rarefied levels.
However, digging through the guidance and the segment numbers suggest that the Company is headed for a rough Q2 which will likely lead to severe implosion in the stock price.
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Disclosure: I am/we are long AMD.