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Shares of Nvidia hit an all-time high on Thursday, with the chipmaker’s revenue more than doubling in the latest quarter as demand for processors needed to train the latest artificial intelligence models soared, beating even Wall Street estimates.
The Silicon Valley-based company, which reported earnings after the New York market closed on Wednesday, expects a bigger-than-expected jump in revenue for the current quarter, confirming that it is overcoming supply constraints faster than expected.
Nvidia shares opened up 6 percent at $502, limiting gains that have more than tripled to more than $1.2 trillion this year. The group’s surge has made it one of the biggest contributors to the artificial intelligence-fueled rise in technology stocks, underpinning a broader rally in U.S. stocks this year.
At least 17 brokerages raised their price targets on the stock after the earnings update. However, profit-taking in the stock soon started to emerge, ending the day up just 0.1%.
Based on published estimates, Wall Street analysts expect revenue of about $11.15 billion in the latest quarter, including $12.5 billion in the third quarter. But unofficial projections have been made ahead of schedule, with “private” estimates suggesting second-quarter sales could top $12 billion and third-quarter sales of $14 billion.
Nvidia turned out to do even better, reporting second-quarter revenue of $13.51 billion, up from $6.7 billion a year earlier, and forecasting $16 billion in sales for the quarter ending in October. The third-quarter numbers were close to the quarterly sales many analysts don’t expect the company to achieve until next year.
Nvidia’s GPUs dominate the market for training artificial intelligence models, and demand has soared, making it the biggest winner of this year’s industry boom. Supply rather than demand has become the main factor restricting the company’s growth in the short term.
CEO Jensen Huang said the largest cloud computing company announced “massive infrastructure” based on Nvidia’s latest artificial intelligence chips in the latest quarter, while other tech groups have also entered into partnerships with Nvidia to integrate the latest artificial intelligence technology Spread to every industry. “The race to adopt generative AI is on,” he said.
On Wednesday, Mr Huang faced a slew of questions from Wall Street about how long the sales spree could last. Analysts explored whether investments in AI training will be followed by a wave of spending on AI inferencing or running existing models, and whether software developers will develop enough useful applications for generative AI to prove useful Substantial investments in new computing power are justified. Currently in progress.
The Nvidia CEO dismissed concerns, repeating recent claims that surging demand for the company’s chips represented a secular shift in data center spending toward “accelerating computing and generating artificial intelligence.”
“We have good visibility throughout the year and next year,” he said. “I don’t think it’s a near-term thing, it’s a long-term industry transformation. We’re seeing these two platform shifts happening at the same time.”
Despite modest capex moves by some of the largest cloud computing companies, revenue jumped in the second quarter — Nvidia’s sales to data center customers jumped to $10.3 billion, about $6 billion more than in the prior three months Dollar.
Huang Jensen said that as cloud companies expand their artificial intelligence capabilities, they are increasingly “shifting” capital investment to the company’s chips instead of “general-purpose computing”, suggesting that Nvidia’s success will come at the expense of chipmakers such as Intel. benefit at the expense of.
The latest sales boost also comes amid U.S. regulations banning exports of the most advanced artificial intelligence chips to China, one of Nvidia’s largest markets. To comply, Nvidia rolled out less powerful versions of its top artificial intelligence chips.
Sales to Chinese customers accounted for about 20% to 25% of Nvidia’s data center revenue in the most recent quarter, Chief Financial Officer Colette Kress said. She defended the high level of exports to China despite U.S. efforts to slow the development of artificial intelligence in China, and said the company did not expect its success in China to lead to a tightening of U.S. export controls. “We believe current regulation is having the desired effect,” she said.
The jump in sales boosted Nvidia’s after-tax profit to nearly $6.2 billion, up from just over $2 billion the previous year. Estimates for earnings per share rose to $2.70, compared with Wall Street expectations of $2.02.
Additional reporting by Jennifer Hughes in New York
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