Nvidia lifts dividend as investors fret about growth prospects

{"text":[[{"start":7.75,"text":"Nvidia’s earnings report met an “apathetic” response as investors worried about the $5.4tn semiconductor giant’s ability to maintain its growth rate, despite strong performance and a big boost to its dividend and buybacks."}],[{"start":23.75,"text":"The world’s most valuable company on Wednesday forecast $91bn in sales for the current quarter, well above average Wall Street expectations of $86bn but short of the most bullish forecasts."}],[{"start":37.85,"text":"Nvidia also announced an additional $80bn in stock buybacks and increased its quarterly dividend to $0.25 per share from $0.01 — making it one of the largest US dividend payers at about $24bn annually."}],[{"start":52.8,"text":"Despite chief executive Jensen Huang again hailing the “extraordinary speed” and “parabolic” trajectory of AI data centre investment, shares in the chip group at the heart of the AI boom dipped 1.3 per cent in after-hours trading."}],[{"start":67.35,"text":"Daniel Newman, chief executive of market intelligence firm The Futurum Group, said on Wednesday that the “apathetic” response reflected increasing signs that Nvidia was becoming a safer, mature tech stock more than three years after the launch of ChatGPT began its meteoric rise."}],[{"start":83.44999999999999,"text":"“There’s a law of large numbers here: Nvidia starts to become more like an Apple. A safe place to invest,” said Newman. “With investors chasing the outsized returns, they are looking at other AI players that might have more market-cap growth potential.”"}],[{"start":98.49999999999999,"text":"Nvidia has been the chief beneficiary of a global boom in AI infrastructure, as tech giants Google, Microsoft, Amazon and Meta have expanded their spending plans to $725bn in 2026 after years of vast investments."}],[{"start":114.89999999999998,"text":"Earnings from the chip group serve as a barometer of the health of the AI ecosystem. Stocks linked to the technology have raced ahead in recent months — driving much of the gains for the wider US market. "}],[{"start":127.19999999999997,"text":"Nvidia alone powered nearly a fifth of the S&P 500’s gains since the beginning of the year, according to Bloomberg data. But its 18 per cent rise so far this year has trailed the 65 per cent increase for the wider SOX index of US chip stocks."}],[{"start":null,"text":"

"}],[{"start":143.09999999999997,"text":"The semiconductor group reported that revenue grew 85 per cent from the year before to a better than anticipated $81.6bn in the quarter to the end of April — marking 15 consecutive quarters of Nvidia beating Wall Street revenue estimates. "}],[{"start":158.44999999999996,"text":"Data centre revenue, which relates to Nvidia’s chip systems for AI infrastructure, almost doubled year on year to $75.2bn. Net income rose to $58.3bn."}],[{"start":170.59999999999997,"text":"Gross margin was 75 per cent, with Nvidia expecting it to remain steady in the current quarter. This was below the 75.7 per cent expected by analysts, adding to concerns about cost pressures as memory companies struggle to build enough chips to meet AI-driven demand."}],[{"start":187.74999999999997,"text":"Nvidia generated $50.3bn in net cash from its operating activities in the quarter — up from $27.4bn for the same quarter the previous year. Huang has been under pressure to return more funds to shareholders as the cash pile mounts."}],[{"start":203.79999999999998,"text":"The company still funnelled massive amounts of its cash into dealmaking during the quarter, with net cash used in investing activities hitting $26.4bn, up from $5.2bn in the same quarter last year."}],[{"start":217.49999999999997,"text":"Melissa Otto, head of research at Visible Alpha, said the increased buybacks and dividend were “really fantastic” but investors were focused on Nvidia’s growth prospects. "}],[{"start":227.79999999999998,"text":"Analysts expect revenue growth to “meaningfully drop off again” to about 36 per cent in the next fiscal year, Otto said. “Those years of the massive upwards revisions may be behind Nvidia now,” she added."}],[{"start":241.24999999999997,"text":"The buyback and dividend boost showed Nvidia has “confidence in our long-term free cash flow outlook”, chief financial officer Colette Kress told analysts."}],[{"start":251.39999999999998,"text":"Nvidia also faces growing competitive pressure with customers including Google and Amazon, and rivals such as AMD and Intel, offering technologies that compete with its graphics processing units."}],[{"start":264.59999999999997,"text":"Investor interest in whether Nvidia is diversifying its customer base away from a small group of “hyperscalers” led it to shed more light on where its AI chip revenue comes from. "}],[{"start":274.24999999999994,"text":"For the first time, it broke down its data centre revenue for the quarter to show it brings in roughly equal amounts from the half dozen Big Tech companies and its other clients — which include smaller data centre groups such as CoreWeave as well as industrial and enterprise clients."}],[{"start":290.34999999999997,"text":"Nvidia did not include any potential AI chip revenue from China in its forecast. Huang joined President Donald Trump’s visit to China to meet President Xi Jinping last week, raising hopes that Beijing would shift its current stance on the import of Nvidia’s H200 chips. "}],[{"start":307.95,"text":"The White House gave a green light to these chip sales late last year. But despite receiving US licences to ship to 10 Chinese customers, Nvidia is waiting on authorities in the country to allow domestic tech companies to proceed."}],[{"start":322.9,"text":"US officials last week said that semiconductors had not been a major topic in the talks. During Huang’s visit, China banned the import of Nvidia’s China-specific gaming chip, the RTX 5090D V2."}],[{"start":343.84999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779326538_1689.mp3"}