AI Moneymakers: Zoom, Nvidia and Vertiv Cash in On AI-Driven Digital Transformation

In the rapidly evolving landscape of artificial intelligence (AI) and digital transformation, two unlikely companies — Zoom and Vertiv — have emerged as trailblazers, defying expectations and showcasing the far-reaching impact of cutting-edge technologies across diverse sectors.

Nvidia’s Earnings Soar as AI Boom Continues

Nvidia’s earnings report on Wednesday (May 22) showcased the ongoing strength of the AI boom, with revenue reaching $26 billion, up 18% from the previous quarter and 262% from the same period last year. The company’s sales and profit exceeded Wall Street expectations, driven by partnerships with companies and countries transitioning to “AI factories.”

Nvidia’s Data Center revenue saw significant growth, rising 23% from the previous quarter and 427% from the same quarter in 2023, fueled by the demand for generative AI training and inference across various industries.

Zoom’s Earnings Call: A Tale of AI, Cash Flow and Customer Growth

In a world where virtual meetings have become the norm, Zoom continues to make its mark. The company recently reported its first-quarter earnings after the market close on Monday, and the results have left analysts and investors pleasantly surprised.

Zoom’s revenue for the quarter reached $1.14 billion, surpassing the consensus estimate of $1.13 billion. This represents a 3.2% increase compared to the same period last year. While online revenue remained flat, enterprise revenue showcased a promising 5.3% year-over-year growth.

But it’s not just about the top line. Zoom also delivered on the bottom line, reporting adjusted earnings of $1.35 per share, comfortably beating analyst estimates of $1.20 per share. This marks the seventh consecutive quarter in which Zoom has exceeded expectations on both fronts.

The company’s cash flow tells a story of its own. Net cash provided by operating activities surged by 40.6% year-over-year to $588.2 million, while free cash flow soared by 43.6% to $569.7 million. These figures demonstrate Zoom’s ability to generate substantial cash, even in the face of a changing market landscape.

Zoom’s customer base continues to expand, with approximately 191,000 enterprise customers on board by the end of the quarter. Among these, 3,883 customers contributed more than $100,000 in trailing 12 months revenue, marking an 8.5% increase compared to the previous year.

But Zoom isn’t just resting on its laurels. The company has been actively integrating AI across its platform, including Zoom Contact Center and Zoom Workplace. These AI-powered solutions aim to revolutionize teamwork by streamlining communications, boosting employee engagement and enhancing productivity within organizations.

The Unsung Hero of the AI Boom: Vertiv

In the fast-paced world of AI, where tech giants often steal the limelight, an unlikely contender has emerged from the shadows. Vertiv, a company specializing in power and cooling equipment for data centers, has been quietly outperforming its peers.

Vertiv’s stock has skyrocketed by an astonishing 516% over the past year, far outpacing the benchmark S&P 500’s 29% gain during the same period, Yahoo noted in a Monday (May 20) report.

According to a recent note from Bank of America in a client note, “Vertiv is the real AI darling,” challenging the conventional wisdom surrounding the AI revolution.

But what’s driving Vertiv’s success? Bank of America suggests that it’s a sign of the AI rally broadening its reach, encompassing an increasingly diverse range of sectors. The advanced chips powering AI require significantly more electricity to operate, creating opportunities for industrials, utilities and commodities to ride the AI wave.