The boom in artificial intelligence (AI) has helped the chip group Nvidia to achieve excellent business figures. The chip group is the largest provider of special chips for computationally intensive AI applications.
The AI boom is causing the business of the chip company Nvidia to grow explosively. The Silicon Valley company doubled its sales year-on-year to $13.5 billion last quarter. Profits jumped from $656 million to just under $6.2 billion, equivalent to €5.7 billion.
Chips and software from Nvidia are particularly well suited for applications based on artificial intelligence. The chip group is by far the largest provider of special chips for computationally demanding AI applications such as ChatGPT from OpenAI. Therefore, the demand for Nvidia products is currently correspondingly high. For the third fiscal quarter, which runs until the end of October, management expects a further increase in sales to around 16 billion dollars.
The expansion of generative artificial intelligence (AI) and large voice and translator models is driving the expanding demand for the chip manufacturer’s network platforms and software solutions, comments analyst Harlan Sur from the US bank JP Morgan. The current Nvidia numbers are also supporting the stock exchanges in Asia and Germany.
In a league with the tech giants
Group boss Jensen Huang spoke of a change in the computer industry towards accelerated computing processes and generative AI. Analysts estimate that demand for Nvidia’s chips in this sector exceeds supply by at least 50 percent. This imbalance is therefore likely to persist for the coming quarters. It is also expected that competitor AMD will snatch market share from Nvidia in the coming year. However, according to experts, Nvidia’s CUDA software is years ahead of AMD’s ROCm variant.
This is also reflected in the stock market value of the company. At the end of May, Nvidia reached a market value of more than one trillion dollars. The price of the share has already tripled this year. The company thus entered the very exclusive circle of companies with a market capitalization of more than one trillion dollars.
Otherwise only the technology group Apple, the software giant Microsoft, the online trading giant Amazon, the Google parent company Alphabet and the Saudi Arabian oil company Aramco have such a stock market value.
Nvidia hangs working supply chains
The chip group has meanwhile spoken out against tightening US restrictions on semiconductor deliveries to China. The current measures served their purpose, said CFO Colette Kress. At Nvidia, revenue from China accounted for between 20 and 25 percent of data center business in the past quarter, as usual.
In view of the worldwide demand, Nvidia does not expect any immediate significant losses, even in the event of further possible restrictions. But in the long term this will destroy the chances of the US chip industry in the huge Chinese market.
Nvidia does not produce its own chips, but develops them and outsources the manufacturing to other companies. Nvidia is therefore heavily dependent on functioning supply chains.
“A Long-Term Change”
Nvidia was founded 30 years ago by US Taiwanese Jen-Hsun “Jensen” Huang. The company initially focused on graphics cards that offered computer gamers better-resolution images. The high-performance microchips are now also being used in the development of artificial intelligence. In the world’s data centers there is a “long-term change” from classic processors to the chip architectures offered by Nvidia, emphasized Huang.
These chips are “harder to come by than drugs,” said technology billionaire Elon Musk, who founded his own company to develop artificial intelligence, xAI.