Nvidia’s revenue soars 262% thanks to record demand for AI chips

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Record sales of artificial intelligence chips boosted Nvidia’s revenue by 262 percent last quarter, exceeding expectations. The CEO said the blockbuster growth would continue this year with the launch of a new line of chips.

Jensen Huang told investors that the company would get “a lot” of revenue from its new Blackwell chips this year as it benefits from exploding demand for the computing power behind generative AI.

Blackwell will contribute to a new phase of growth for the company, Huang said, adding that Nvidia would continue to roll out newer, more powerful chips at the same pace. “After Blackwell there is another chip and we are on a one year rhythm,” he said.

Demand for Nvidia’s AI data center graphics processing units has soared over the past year, as the largest technology companies rush to develop the computing infrastructure needed to deliver powerful new AI products at scale. Google, Microsoft, Meta and Amazon have all indicated that their spending will remain high in 2024.

Sales for the three months to the end of April were $26 billion, compared to consensus expectations of $24.7 billion. The huge year-on-year increase was similar to the previous quarter, when growth was 265 percent. For the current quarter, Nvidia expects revenue of about $28 billion, plus or minus 2 percent, compared to consensus estimates of $26.8 billion.

Nvidia’s data center revenues, which relate to its coveted AI chips, rose 427 percent year-over-year to $22.6 billion this quarter, driven by strong demand for Nvidia’s current generation of Hopper GPUs, Nvidia Chief Financial Officer Colette Kress said. , to investors. Shipping of the Blackwell chip is expected to begin this quarter.

Nvidia shares, which have continued their blistering rise of more than 90 percent since the start of the year, rose about 6 percent in after-hours trading. The chipmaker also announced a 10-for-1 stock split, effective June 7, and said it would increase its quarterly cash dividend by 150 percent.

Ahead of the results announcement, traders were bracing for big swings in Nvidia stock and markets more broadly. The stock’s massive rally has made it one of the most watched names on Wall Street. Since the start of 2023, its market capitalization has increased more than sixfold to $2.3 trillion, overtaking Google parent Alphabet and Amazon to become the third most valuable U.S. publicly traded company.

Nvidia has moved quickly to capitalize on strong demand for AI and stay ahead of competitors and customers developing their own AI chips. It unveiled its Blackwell chips in March, which it says are twice as powerful as the current generation of chips for training AI models and offer five times the performance in “inference” – the speed at which such models can questions can be answered. That came just a year after the company unveiled its previous generation GPU chip architecture, Hopper. Blackwell is expected to begin shipping later this year.

Analysts had wondered whether the transition to a new product line could impact the massive year-over-year growth Nvidia posted in previous quarters as it creates a temporary “air pocket” in demand. For example, the rapid pace of chip releases has led Amazon to change plans to order chips based on the latest generation of Nvidia’s architecture and replace them with the Blackwell line.

But Huang assured investors that demand for both the Hopper and Blackwell lines was “well ahead of supply,” a situation that would likely continue “well into next year.”

Diluted earnings per share amounted to $5.98, more than 600 percent more than a year ago. Gross margin was 78.4 percent, slightly better than the 77 percent analysts had forecast, with net profit of $14.9 billion, ahead of expectations of $13.2 billion.

Rivals AMD and Intel have been rolling out AI data center chips to compete with Nvidia’s, joining forces with Nvidia’s customers to offer alternatives to their software platform Cuda, which is cementing its dominance as a chip supplier.

In April, Intel and AMD reported lackluster first-quarter results and modest guidance, suggesting they are yet to reap the benefits of the explosion in demand. On Tuesday, Microsoft announced it would use AMD’s new MI300X accelerator chips and its ROCm software to run some of the most demanding AI workloads on its Azure cloud service.

“Nvidia beat the data center [revenue] and beat it across the board,” said Daniel Newman, CEO of The Futurum Group. “The entire market was waiting for this song and Nvidia delivered.”

The stock split would create both “greater accessibility” and “additional momentum for the shares,” he added. “The AI ​​business is alive and well.”

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