Nvidia's Q1 EPS Surges 140% on Data Centre Revenue Blowout, Allaying AI Bubble Fears

US equity indexes surged by around 1% on Wednesday, buoyed by Nvidia after it posted record fiscal Q1 financial results to alleviate AI bubble fears.

Major hedge funds, including David Tepper's Appaloosa, Ken Griffin's Citadel Advisors, and even Steve Cohen's Point72 Asset Management, sold a considerable amount of the Nvidia stock in Q1. Even The Big Short's Michael Burry continues to hold a massive bet against Nvidia as he believes the market fundamentals don't actually align with his investment philosophy anymore.

However, the AI chip leader managed to alleviate these fears with a 140% surge in Q1 adjusted earnings per share to $1.87 from $0.78 a year earlier. Revenue surged a massive 85% to $81.62 billion from $44.06 billion in the prior year quarter. For Q2, the company expects revenue of $91 billion, plus or minus 2%, which does not include any data centre compute revenue from China.

The massive revenue leap in Q1 could be attributed to the 92% jump in data centre revenue to $75.2 billion. 'The buildout of AI factories is accelerating at extraordinary speed,' CEO Jensen Huang had stated in a press release.

He believes agentic AI is already here, executing productive work, driving real value, and scaling swiftly across industries, adding that Nvidia is 'uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open source model, and scales everywhere AI is produced — from hyperscale data centers to the edge.'

Prioritizing Shareholder Returns, Boosting Dividends by 2,400%

In Q1, Nvidia returned a record $20 billion to shareholders in the form of share buybacks and cash dividends.

Although the company had $38.5 billion remaining under its share repurchase authorization by the end of Q1, the board authorized a boost to its buyback programme on 18 May by an additional $80 billion worth of company shares. The stock repurchase programme does not have an expiry date.

More importantly, Nvidia ramped up its quarterly dividend to $0.25 per share from $0.01 earlier, payable 26 June to stockholders of record 4 June, representing a straight 2,400% jump. While this benefits shareholders, it also boosts Huang's annual dividend income from his Nvidia stock holdings by many folds.

As of 24 March 2025, Huang held over 922 million shares of Nvidia. It would mean that the latest dividend hike boosted his annual dividend income to over $922 million annually from around $36.8 million earlier.

A New Reporting Framework

The company also said in the Q1 earnings release that it will shift to a new report framework comprising two market platforms: data centre and edge computing.

Within the data centre segment, the company will report two sub-markets, namely hyperscale and ACIE, which includes clouds, industrial, and enterprise. Note that hyperscale will include revenue from the public clouds and consumer internet companies, while ACIE addresses Nvidia's growth opportunity in diverse AI purpose-built data centres and factories globally.

Elsewhere, edge computing comprises data processing devices for agentic and physical AI, including PCs, game consoles, workstations, and robotics.

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