25-5-2023 (California) Nvidia Corp, the world’s most valuable listed semiconductor company, announced its second-quarter revenue forecast, surpassing Wall Street estimates by more than 50 percent. The company also revealed plans to enhance its supply in response to the surging demand for its artificial-intelligence chips, widely used to power ChatGPT and similar services.
Following the announcement, Nvidia’s shares skyrocketed up to 28 percent in after-hours trading, reaching a record high of $391.50. This increase in stock value boosted Nvidia’s market capitalization by approximately $200 billion, bringing it to over $950 billion. As a result, Nvidia solidified its position as the world’s most valuable chipmaker and ranked as the fifth-most valuable company on Wall Street.
Nvidia has been grappling with meeting the demand for its AI chips, with Tesla Inc’s CEO, Elon Musk, recently commenting that acquiring the graphics processing units (GPUs) was “considerably harder than getting drugs.” This scarcity has prompted Nvidia to take action.
However, according to Nvidia’s CEO, Jensen Huang, the company began full-scale production of its latest AI chips in August of last year, providing a supply buffer when chatbot applications experienced a significant surge in popularity.
Huang stated in an interview with Reuters, “In January, the new demand was incredibly steep. We had to place additional orders, and we procured substantially more supply for the second half” of 2023.
For the current quarter, Nvidia has forecasted revenue of $11 billion, plus or minus 2 percent. This projection far exceeds the expectations of analysts polled by Refinitiv, who had predicted revenue of $7.15 billion.
Edward Jones analyst Logan Purk commented, “Given the generative AI gold rush taking place, this should fuel demand for Nvidia’s chips for the remainder of the year.”
Nvidia’s adjusted revenue for the quarter ending April 30 stood at $7.19 billion, surpassing Refinitiv analysts’ expectation of $6.52 billion. The company’s data center chip sales reached $4.28 billion, outperforming estimates of $3.89 billion, according to data from FactSet.
While Nvidia faces competition in the AI chip sector from traditional rivals like Advanced Micron Devices Inc and Intel Corp, as well as startups such as Cerebras Systems, it has strategically shifted its focus to selling comprehensive AI supercomputing systems instead of standalone chips. This approach targets large enterprises seeking to possess Nvidia’s AI expertise, comparable to that of Silicon Valley tech giants. Huang emphasized that no company can build a cutting-edge AI data center without Nvidia’s technology and software, offering a unique advantage in the enterprise market.
Gaming chip revenue also surpassed Wall Street expectations, reaching $2.24 billion compared to estimates of $1.97 billion, according to data from FactSet.
Nvidia reported a rise in net income to $2.04 billion, or 82 cents per share, from $1.62 billion, or 64 cents per share, in the same period last year. Excluding items, the company achieved earnings of $1.09 per share in the first quarter, surpassing estimates of 92 cents.
