Blog — 09 Oct, 2024
Google Cloud Summit: A Preview of Google Cloud Margin Expectations
Nvidia’s fiscal Q1 2025 earnings release
Nvidia delivered total revenues for Q1 of $26.0 billion, beating Visible Alpha’s consensus estimate of $24.7 billion by $1.3 billion, driven by continued revenue growth of Nvidia’s Data Center segment. The segment saw its Q1 revenue surge to $22.6 billion, nearly $1.5 billion ahead of the $21.2 billion consensus estimate coming into the quarter.
This revenue surge has continued to be driven by strong demand for Hopper GPUs, particularly from cloud service providers. On the earnings call, the company highlighted that they are still supply constrained and expect this to continue into next year.
The Data Center segment’s non-GAAP gross margin remained at 79% in Q1, in line with consensus. This drove a beat on the EPS line with non-GAAP diluted EPS of $6.12/share, exceeding consensus of $5.60 by nearly 10%. In addition, Nvidia announced a 10-for-1 forward stock split effective June 7, 2024 and a quarterly cash dividend increased by 150% to $0.01 per share on a post-split basis.
Figure 1: Nvidia estimate trends
Source: Visible Alpha consensus (October 8, 2024). Stock price data courtesy of FactSet.
Alphabet’s current stock price is as of the market close on October 7, 2024
Alphabet’s Key Financial Items
Source: Visible Alpha consensus (October 8, 2024). Stock price data courtesy of FactSet.
Alphabet’s current stock price is as of the market close on October 7, 2024
Final Thoughts
The development and adoption of GAI is in its infancy, but evolving quickly. Google Cloud seems poised to benefit from this technology shift. However, how the profitability of this business will ultimately shake out will be a critical long-term investment question for the stock. Will Google Cloud be able to carve out a more profitable place in the cloud landscape and move more quickly toward the 27% margin Amazon achieved last year for AWS?
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