The boom in artificial intelligence continues unabated – and is once again driving explosive growth for chip manufacturer Nvidia. This also leads to a euphoric mood among investors on the stock market.
Due to the booming business with artificial intelligence (AI), the Californian chip manufacturer Nvidia has achieved quarterly sales above market expectations for the sixth time in a row. In the fourth quarter, revenue increased by 265 percent year-on-year to $22.1 billion, the chip company announced. Analysts on average had expected $20.4 billion.
The business with processors for data centers has even grown fivefold, it said. It had almost quadrupled in the previous quarter. According to Nvidia, sales were now $18.4 billion.
CEO sees increasing demand worldwide
The chip manufacturer’s technologies, originally developed for graphics cards, have long been proven in computing work for training AI applications. This causes Nvidia’s business – and its stock market value – to rise rapidly. Nvidia shares have now increased by around 50 percent since the beginning of the year alone.
Observers had assumed that even the slightest hint of a slowdown in growth would have sent the price downwards. However, Nvidia did not disappoint. The outlook for the current quarter was also above expectations. Nvidia promised revenue of around $24 billion; the market had expected around $22 billion.
Nvidia’s quarterly profit jumped from $1.4 billion to almost $12.3 billion within a year. The use of artificial intelligence has reached a turning point and demand is increasing worldwide, said Nvidia boss Jensen Huang.
China business is slowing down
Meanwhile, business is being slowed somewhat by the US government’s measures against deliveries of AI technology to China. Nvidia is not allowed to sell its most modern chip systems, which are used to train artificial intelligence, there.
Washington points to the risk that the technology could be used for military purposes. Nvidia has not yet received an export license for a slimmed-down version of the devices, which is why chips have recently been delivered whose performance is below the specified limits.
China had a mid-single-digit percentage share of data center technology business in the last quarter, Nvidia reported. The US government wants the company to be as successful as possible in China, but within the limits of performance restrictions, said Huang.
Once again AI euphoria on the stock market
After the business figures were presented, Nvidia shares rose by a good nine percent in after-hours US trading. With a market value of around $1.8 trillion, the company is number three among the “Magnificent Seven” of the largest US technology companies.
“Nvidia dominates the market for GPU semiconductor chips and is a leader in artificial intelligence,” said investment strategist Ben Laidler from online broker eToro. “But with this position comes challenges, including managing enormous demand and defending market share against competitors such as AMD and Intel.” Despite these challenges, Nvidia’s long-term growth potential remains attractive.
The strong numbers are generally causing euphoria on the stock markets. This morning, the Japanese Nikkei 225 is above its previous record from 1989, and the DAX is also heading for a new record high. Nvidia is likely to “further fuel market optimism regarding the AI boom,” wrote Commerzbank experts. Since November 2022, when OpenAI had its big breakthrough with ChatGPT, the topic of AI has triggered a real gold rush mood – including on the stock market.