Nvidia, the king of chips that power artificial intelligence, on Wednesday posted quarterly financial results that reinforced how the company has become one of the biggest winners of the artificial intelligence boom and said demand for its products will fuel continued sales growth.
The Silicon Valley chipmaker has seen a phenomenal rise over the past 18 months, driven by demand for its specialized and expensive semiconductors, which are used to train popular artificial intelligence services such as OpenAI’s ChatGPT chatbot. Nvidia has become known as one of the “Magnificent Seven” technology stocks, which, along with the likes of Amazon, Apple and Microsoft, have contributed to the stock market’s strength.
Nvidia’s valuation has risen more than 40 percent to $1.7 trillion since the start of the year, making it one of the most valuable public companies in the world. Last week, the company briefly eclipsed the market values ​​of Amazon and Alphabet before falling to the fifth most valuable tech company. Its stock market gains are largely the result of repeatedly beating analysts’ expectations for growth, a feat that becomes more difficult as they keep raising their forecasts.
On Wednesday, Nvidia reported that revenue in its fiscal fourth quarter more than tripled from a year earlier to $22.1 billion, while profit rose nearly ninefold to $12.3 billion. Revenue was well above the $20 billion the company forecast in November and above Wall Street estimates of $20.4 billion.
Nvidia forecast revenue in the current quarter to come in at about $24 billion, also more than triple the prior period and higher than the average analyst forecast of $22 billion.
Jensen Huang, co-founder and CEO of Nvidia, argues that a seasonal shift toward upgrading data centers with chips needed to train powerful artificial intelligence models is still in its early stages. That will require spending about $2 trillion to equip all buildings and computers to use chips like Nvidia’s, he predicts.
“Accelerated computing and genetic artificial intelligence have reached a tipping point,” Mr. Huang said in a press release. “Demand is growing globally across companies, industries and nations.”
In an interview later on Wednesday, Mr. Huang said much more growth for the company lay ahead. “We’re a year away from productive artificial intelligence,” he said. “My guess is that we’re literally in the first year of a ten-year cycle of this technology spreading across every industry.”
Some analysts had predicted a sell-off following Nvidia’s announcement, a reaction to how high its share price has risen. But shares rose more than 8 percent in after-hours trading.
“Despite concerns about its high valuation, Nvidia’s unparalleled AI-related intellectual property, rooted in decades of visionary investment, sets it apart in a league of its own,” Rosenblatt analyst Hans Mosesmann wrote. Securities, in a research report before the company reported.
One factor driving Nvidia’s latest revenue growth is the ability of the company’s manufacturing partners, led by Taiwan Semiconductor Manufacturing Company, to boost supplies of Nvidia’s flagship AI chip, which has prices ranging from $15,000 to $40,000. $.
Mr. Huang said on a conference call with analysts on Wednesday that the availability of these chips has improved significantly, but noted that the company will soon introduce new products that will again be rare.
“Whenever we have new products, it goes from zero to a very large number, and you can’t do it overnight,” he said during the call.
However, cloud computing giants such as Amazon, Google and Microsoft are designing their own AI chips for use in addition to Nvidia’s, and rival chipmakers continue to introduce their own AI products.
Intel, which has long dominated the standard microprocessor chip industry but lags behind in artificial intelligence, gathered a number of partners and potential customers in Silicon Valley on Wednesday to discuss its plans to offer manufacturing services, which could boost the industry’s ability to make AI chips. Among those in attendance was Sam Altman, who relies heavily on Nvidia chips as CEO of OpenAI.
“Intel was once the bad Borg of the industry,” said Daniel Newman, chief executive of Futurum Research, which tracks the semiconductor industry. Now, he said, “the companies are coming together to make sure Nvidia doesn’t get too powerful.”
The Biden administration has raised another set of hurdles for Nvidia and other US chipmakers by placing restrictions on chip sales in China. Nvidia responded by selling less powerful versions of some products on the market.
However, the company said on Wednesday that its China sales fell to a mid-single-digit percentage of its data center chip revenue, down from 19% in fiscal 2023.
Meanwhile, some experts worry that a global rollout of the company’s expensive, demanding chips will strain countries’ power grids and budgets.
Mr Huang addressed some of these concerns in February at the World Government Summit in Dubai. He said Nvidia’s chips were cheap and efficient compared to using slower standard microprocessors to do the same job — and that much faster chips were on the way, some of which the company is expected to unveil in March.
“If you assume that computers never get faster, you might end up with the conclusion that we need 14 different planets and three different galaxies and four more suns to power all of that,” Mr. Huang said. “But obviously computer architecture continues to advance.”
