NVIDIA Corporation (NASDAQ: NVDA) recently posted its Q1 2024 financial results, sending its share price skyrocketing to US$1,064 and its market capitalisation soaring to US$2.6 trillion.
At the current currency exchange rate, this translates to AUD$3.9 trillion. This massive valuation now dwarfs BHP Group Ltd (ASX: BHP), the world's largest mining company, with a market value of $226.4 billion at the time of writing.
In other words, Nvidia is now worth more than 17 times BHP. According to investment strategist Lyn Alden, it is also one of the only assets that has outperformed Bitcoin over a 10-year period.
Let's dive into what's driving Nvidia's incredible growth and what might come next for the tech giant.
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AI is driving Nvidia shares higher
The artificial intelligence (AI) boom is a key factor behind Nvidia's meteoric rise. As tech companies globally invest heavily in AI, Nvidia's GPUs and chips have become essential components, making it a crucial player in the AI revolution. This is akin to selling shovels to miners during a gold rush.
For the quarter ending 31 March 2024, Nvidia last week reported extraordinary financial performance. You can see the company's staggering growth below:
| Item | Year-on-Year Growth |
| Total Revenue | 262% |
| Operating Income | 690% |
| Earnings Per Share | 628% |
In what I consider to be shareholder-friendly actions, Nvidia management announced a ten-for-one forward stock split "to make stock ownership more accessible to employees and investors". It also increased its quarterly dividend by 150% to $0.10 per share.
These results stunned Wall Street as if they'd seen a bear in real life. IG Markets analyst Hebe Chen said there was no doubt that Nvidia's numbers "moved beyond the financial performance of a single company".
"From a data standpoint", Chen said, "today's results have undoubtedly cleared any remaining doubts in the market about the AI frenzy", adding this was "a validation of how far the AI stocks' party can go".
What's next for Nvidia shares?
Looking ahead, Nvidia's management projects $28 billion in revenues for the next quarter, with gross margins of 75%.
Wall Street analysts forecast the company's annual revenue to hit $120.5 billion, marking a 98% growth from 2023. In the last three months, Nvidia's full-year revenues have been revised a staggering 41 times, and earnings per share have been revised 38 times.
But with Nvidia shares trading at a price-to-earnings (P/E) ratio of 62, investors are expecting significant future performance.
IG Markets' Hebe Chen warns these high expectations, set by the recently announced stock split and dividend boosts, "sets a dauntingly high bar for future excitement".
Foolish takeaway
Nvidia's share price rise to US$1,064 marks a staggering 22,150% total return over the past 10 years.
A $10,000 investment in the tech player a decade ago would now be worth over $2.2 million. Analysts project strong growth for the company in the next 1–2 years. Beyond that, who knows what's in store.
