The stock markets were up on Thursday, and considered one of the massive reasons was the blowout earnings of considered one of the biggest firms on this planet, NVIDIA Corp. (NASDAQ:NVDA). This semiconductor stock, included among the many Magnificent Seven, was up by about 15% on Thursday to around $777 per share after the corporate beat earnings estimates.

NVIDIA’s stock price is already up 61% yr so far (YTD) and 274% over the past yr as of Feb. 22, and it’s showing no signs of slowing down.

Record revenue last yr

NVIDIA makes graphics processing units (GPUs), primarily for computers, gaming systems and cars, but what has enabled it to face out is its artificial-intelligence chips for accelerated computing at data centers that handle complex AI-related functions.

NVIDIA has been a juggernaut over the past yr, and that was clear in its fourth-quarter and full-year earnings report released Wednesday after the market closed. For the quarter that ended Jan. 28, 2024, NVIDIA generated a record $22.1 billion in revenue, up 22% from its blowout third quarter and a whopping 265% up from its fourth quarter a yr ago.

Net income hit $12.3 billion within the quarter, or $4.93 per share. That’s up 33% from the third quarter and an astounding 765% yr over yr.

For the complete fiscal yr that ended Jan. 28, NVIDIA generated $60.9 billion in revenue, which is 126% higher than the previous fiscal yr. Net income was $29.8 billion, or $11.93 per share, up 585% from the previous fiscal yr.

The fundamental revenue driver was data centers, which generated many of the chipmaker’s revenue within the fourth quarter, a record $18.4 billion. Data center revenue also posted a record $47.5 billion for the fiscal yr, accounting for about 78% of total revenue. Large cloud providers like Microsoft (NASDAQ:MSFT) accounted for greater than half of NVIDIA’s data center revenue.

“Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, in addition to from enterprise software and consumer web firms. Vertical industries — led by auto, financial services and healthcare — are actually at a multi-billion-dollar level,” said Jensen Huang, founder and CEO of NVIDIA, within the earnings report.

Bullish outlook

It seems that NVIDIA just isn’t slowing down any time soon based on its outlook. For the primary quarter of its fiscal 2025, the chipmaker expects revenue of $24 billion, which can be one other record, beyond the $22 billion last quarter and greater than triple the $7.2 billion in the primary fiscal quarter a yr ago. NVIDIA is targeting a gross margin of 76.3% in Q1, up barely from 76% in Q4, while it projects operating expenses of $3.5 billion, up from $3.2 billion last quarter.

The corporate only provides guidance for one quarter ahead, but in his comments to analysts on the earnings call, Huang was bullish that their growth would proceed long run.

“Fundamentally, the conditions are excellent for continued growth calendar ’24, to calendar ’25 and beyond, and let me let you know why. We’re originally of two industry-wide transitions, and each of them are industry-wide,” Huang said on the decision.

The primary transition is from general to accelerated computing.

“General-purpose computing, as , is beginning to run out of steam … There’s just no reason to update with more CPUs when you may’t fundamentally and dramatically enhance its throughput such as you used to. And so you will have to speed up every part. That is what NVIDIA has been pioneering for a while,” Huang said. 

The second industry-wide transition is generative AI.

“We’ve seen a generative AI really becoming an entire latest application space, an entire latest way of doing computing, an entire latest industry is being formed and that’s driving our growth,” added Huang, who expects to see AI data centers “in every industry, every company, every region.”

NVIDIA has a high price-to-earnings ratio, but its forward P/E is about 33 and its five-year P/E to growth ratio is lower than one, so based on its incredible earnings growth, its valuation may be very reasonable.