Nvidia expects revenue boom as AI drives demand for chips

Rising demand for the chips needed to train the latest wave of generative AI systems like ChatGPT prompted Nvidia to issue a revenue forecast well above Wall Street expectations, sending its stock price soaring. in the secondary market.

The US chipmaker said on Wednesday that it expected sales to hit $11 billion in the three months to the end of July, more than 50 percent above the $7.2 billion that analysts they expected and confirming their position as the biggest short-term beneficiary of the AI ​​Race that has disrupted the tech industry.

The forecast prompted a 27 percent jump in Nvidia shares, which had already more than doubled since the start of the year, and lifted its stock value to a record $960 billion.

Jensen Huang, chief executive, said the company was “significantly increasing our offerings to meet growing demand” for its entire family of data center chips, including the H100, a product launched earlier this year that was designed to handle the demands of so-called large language models like OpenAI’s GPT-4.

The race in the tech industry to develop larger AI models has led some customers to privately worry about a shortage of H100 chips, which only went on sale earlier this year. However, Nvidia’s $4.28 billion in sales to data center customers in the latest quarter exceeded even the most optimistic analyst forecasts, and the company said there were strong sales of both the H100 chips and A100 chips. , building on its previous chip architecture.

Colette Kress, chief financial officer, signaled a further surge in demand that would extend well beyond the current quarter, though she said it was too early for the company to issue longer-term financial guidance. Visibility on future demand had “stretched out a few quarters” and led Nvidia to acquire “substantially more supply for the second half of the year.” [fiscal] year,” he said.

Nvidia’s forecast pointed to a possible doubling of sales to data center customers in three months, even though data center sales were running at an annualized rate of $17 billion in the first quarter of this year. . The growth is coming from customers across the board, Kress said, with consumer internet companies, cloud computing providers and enterprise customers rushing to apply generative AI to their businesses.

The bullish forecast came as Nvidia reported that revenue and profit in its latest quarter through the end of April also beat forecasts, thanks to a surge in sales to data center customers as demand for AI. Revenue reached $7.19 billion, up 19% from the previous three months but down 13% from a year earlier as game system chip sales fell.

Earnings per share rose 22 percent from a year earlier to 82 cents, or $1.09 on the pro forma basis Wall Street judges the company. The consensus view on Wall Street had been for revenue of $6.52 billion and pro forma earnings of 92 cents per share.