Nvidia sales forecast jumps on AI boom
Nvidia forecast second-quarter revenue more than 50 percent above Wall Street estimates, and said it is boosting supply to meet surging demand for its artificial-intelligence chips, which are used to power ChatGPT and many similar services.
Shares of Nvidia, the world’s most valuable listed semiconductor company, rocketed as much as 28 percent after the bell to trade at a record high.
The gain increased Nvidia’s stock market value by about US$200 billion ($305 billion) to over US$950 billion, extending the Silicon Valley company’s lead as the world’s most valuable chipmaker and Wall Street’s fifth-most-valuable company.
Nvidia has strained to meet demand for its AI chips, with Tesla chief executive officer Elon Musk, who is reportedly building out an artificial-intelligence startup, earlier this week telling an interviewer that the graphics processing units (GPUs) are “considerably harder to get than drugs.”
But Nvidia chief executive officer Jensen Huang told Reuters in an interview that the company had started full production of its latest AI chips in August last year, which gave it some buffer for supplies when chatbot apps exploded in popularity.
“In January, the new demand was incredibly steep,” Huang said.
“We had to place additional orders, and we procured substantially more supply for the second half” of 2023.
Nvidia forecast current-quarter revenue of US$11 billion, plus or minus two percent. Analysts polled by Refinitiv had forecast revenue of US$7.15 billion.
“Given the generative AI gold rush taking place, this should fuel demand for Nvidia’s chips for the remainder of the year,” said Edward Jones analyst Logan Purk.
Adjusted revenue for the quarter ended April 30 was US$7.19 billion. Analysts polled by Refinitiv were expecting revenue of US$6.52 billion.
The company’s data center chip sales hit US$4.28 billion, beating analyst estimates of US$3.89 billion, according to segment data from FactSet.
Nvidia faces competition in AI chips from traditional rivals like AMD and Intel, as well as from startups such as Cerebras Systems and the in-house AI chip efforts at companies like Google and Amazon.com .
But Huang said Nvidia has shifted toward selling entire AI supercomputing systems, rather than just chips, to large companies that want to own – and are willing to pay for Nvidia’s prices and gross margins – AI expertise comparable to Silicon Valley’s tech giants.
“No company can build a state-of-the-art AI data centre without the technology and all the software of a (cloud computing provider), but we have all that capability,” Huang said.
“The enterprise is a very, very different market.”
Net income rose to US$2.04 billion, or 82 US cents per share, from US$1.62 billion, or 64 US cents per share, a year earlier.
Excluding items, the company earned US$1.09 per share in the first quarter, beating estimates of 92 US cents.