Nvidia: Riding the AI Wave
Artificial intelligence (AI) has captivated the headlines recently, featuring groundbreaking developments like generative AI. This innovative technology streamlines routine tasks, boosting productivity with ease. Picture systems that can sift through emails, craft responses, search and condense related documents swiftly, and even create presentations based on minimal prompts.
At the forefront of this AI revolution is Nvidia (NASDAQ: NVDA), the key provider of graphics processing units (GPUs) supporting this transformative tech. The advent of the AI surge catapulted demand for Nvidia’s processors to record highs, with no sign of slowing. In its fiscal 2025 first quarter, Nvidia posted its fourth consecutive quarter of triple-digit year-over-year sales and profit spikes. Recording a remarkable $26 billion in quarterly revenue, a 262% surge year over year, propelled earnings per share (EPS) to $5.98, a steep 629% rise. The growth momentum is anticipated to continue, with projected second-quarter revenue of $28 billion, marking a 107% increase.
Powering these exceptional results is the accelerating adoption of generative AI. Nvidia’s data center segment, encompassing cloud computing and AI processors, fetched record sales of $22.6 billion, showcasing a staggering 427% surge. With the stock skyrocketing 3,000% over five years, Nvidia will undergo a 10-for-1 stock split in June. The company also hiked its dividend by 150% to $0.01 post-split. Although the yield rests at a modest 0.04%, it lays a solid foundation for future substantial increases, especially with a payout ratio of less than 3% of profits.
Chipotle Mexican Grill: Defying Economic Gravity
Surfing through the worst economic downturn in over a decade, Chipotle Mexican Grill (NYSE: CMG) managed to sustain growth. Amidst challenging macroeconomic conditions, Chipotle continued to witness growth in comparable store sales (comps) in every quarter since the start of 2022, a testament to the enduring demand for Chipotle’s “food with integrity.”
The year commenced on a high note for Chipotle, with revenue climbing 14% year over year to $2.7 billion and diluted EPS escalating by 24% to $13.01. Comps cherished a 7% boost, fueled by heightened customer footfall and Chipotle’s unparalleled pricing prowess. Noteworthy was the upward trajectory in restaurant-level operating margins, which soared to 27.5% from 25.6% in the prior-year period.
Fueling this robust growth is Chipotle’s thriving digital strategy, with its rewards program surpassing 40 million members this year. The introduction of Chipotlanes, exclusive drive-thrus for mobile orders, has been a significant driver. Chipotle noted that outlets with Chipotlanes witness higher sales and profit margins boost. Consequently, digital orders are outpacing overall sales, contributing 37% of total food and beverage revenue in Q1.
With a whopping 375% surge in the past five years, Chipotle recently announced a 50-for-1 stock split scheduled for June, hailed as “one of the biggest stock splits in New York Stock Exchange history.”
