Nvidia, the leading provider of artificial intelligence chips, released quarterly financial results on Wednesday that underlined that the company has become one of the biggest winners of the artificial intelligence boom and said demand for its products will fuel further sales growth.
The Silicon Valley chipmaker has enjoyed an extraordinary rebound over the past 18 months, driven by demand for its specialized and expensive semiconductors used to train popular AI services such as OpenAI’s ChatGPT chatbot. Nvidia has become known as one of the “Magnificent Seven” technology stocks that, along with others such as Amazon, Apple and Microsoft, have helped boost the stock market.
Nvidia’s valuation has risen more than 40 percent since the beginning of the year to $1.7 trillion, making it one of the most valuable listed companies in the world. Last week, the company briefly surpassed the market values of Amazon and Alphabet before falling back to become the fifth most valuable tech company. Stock market gains have largely come from consistently beating analysts’ growth expectations, a task that is becoming increasingly difficult as they continue to raise their forecasts.
On Wednesday, Nvidia reported that revenue in its fiscal fourth quarter more than tripled from a year ago to $22.1 billion, while profit increased nearly nine-fold to $12.3 billion. Sales were well ahead of the $20 billion the company forecast in November and above Wall Street estimates of $20.4 billion.
Nvidia forecast that revenue would be around $24 billion in the current quarter, also more than triple the same period last year and above analysts’ average forecast of $22 billion.
Jensen Huang, co-founder and CEO of Nvidia, argues that the epochal shift toward upgrading data centers with chips needed to train powerful AI models is still in its early stages. He predicts that around $2 trillion would have to be spent to equip all buildings and computers with chips like Nvidia’s.
“Accelerated computing and generative AI have reached the tipping point,” Mr. Huang said in a press release. “Demand is increasing worldwide in all companies, industries and countries.”
In an interview later on Wednesday, Mr. Huang said there was much more growth ahead for the company. “We’ve been in generative AI for a year,” he said. “I suspect we are literally in the first year of a 10-year cycle of proliferation of this technology in every single industry.”
Some analysts had predicted a sell-off after Nvidia’s announcement, a reaction to the sharp rise in share price. But in after-hours trading, shares rose more than 8 percent.
“Despite concerns about its lofty valuation, Nvidia’s unparalleled AI-related intellectual property, built on decades of visionary investments, puts the company in a league of its own,” Rosenblatt Securities analyst Hans Mosesmann wrote in a research note before the company reported.
One factor driving Nvidia’s recent sales growth is the ability of the company’s manufacturing partners, led by Taiwan Semiconductor Manufacturing Company, to increase shipments of Nvidia’s flagship AI chip, which is priced between $15,000 and $40,000.
Mr. Huang said in a conference call with analysts on Wednesday that the availability of those chips had improved significantly, but noted that the company would soon introduce new products, which are again in short supply.
“Whenever we have new products, the number goes from zero to a very large number, and that doesn’t happen overnight,” he said during the call.
But giant cloud computing companies like Amazon, Google and Microsoft are developing their own AI chips to 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 has lagged behind in AI, gathered a number of partners and potential customers in Silicon Valley on Wednesday to discuss its plans to offer manufacturing services that would expand industry capacity for manufacturing of AI chips could increase. One of the participants was Sam Altman, who as CEO of OpenAI relies heavily on Nvidia chips.
“Intel was once the evil Borg of the industry,” said Daniel Newman, managing director of Futurum Research, which tracks the semiconductor industry. Now, he said, “companies are coming together to make sure Nvidia doesn’t become too much more powerful.”
The Biden administration has raised a number of other hurdles for Nvidia and other US chipmakers and restricted their chip sales in China. Nvidia responded by selling lower-performance versions of some products on the market.
Still, the company said Wednesday that its sales in China fell to a mid-single-digit percentage of its data center chip sales from 19 percent in fiscal 2023.
Meanwhile, some experts worry that a global rollout of the company’s expensive, power-hungry chips will overwhelm countries’ power grids and budgets.
Mr. Huang addressed some of these concerns at the World Governments Summit in Dubai in February. He said Nvidia’s chips are cheap and efficient compared to using slower standard microprocessors to do the same work – and that much faster chips are on the way, some of which the company expects to unveil in March.
“If you assume that computers will never get faster, you might conclude that we need 14 different planets and three different galaxies and four more suns to power all of this,” Mr. Huang said. “But obviously computer architecture continues to advance.”
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2024-02-22 01:53:31
www.nytimes.com
