The boom in the use of artificial intelligence continues to ensure strong growth for the chip company NVIDIA.
In the last quarter, sales of 22.1 billion US dollars (around 20.3 billion euros) were more than three times as high as the year before. Analysts on average had expected $20.4 billion.
The key figures of the semiconductor company, which specializes in artificial intelligence, were once again remarkably good, wrote analyst Stacy Rasgon from Bernstein Research in a study. Despite the high market expectations, the results were clearly above. The expert increased his price target from $700 to $1,000. He sees plenty of price potential and continues to rate the shares as “Outperform”.
At $18.4 billion, the business with technology for data centers even brought in five times as much sales as in the same quarter of the previous year. The NVIDIA technologies, originally developed for graphics cards, have long been proven in computing work to train applications with artificial intelligence. This is causing NVIDIA’s business – and stock market value – to rise rapidly.
The numbers were eagerly awaited. Observers assumed that the slightest hint of a slowdown in growth would have sent the price down. However, NVIDIA did not disappoint.
The outlook for the current quarter was also above expectations. NVIDIA announced revenues of around $24 billion, while the market had expected an average forecast of 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, emphasized NVIDIA boss Jensen Huang.
NVIDIA’s 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 out 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 it recently delivered chips whose performance is below the specified limits.
China had a mid-single-digit percentage share of data center technology business in the last quarter, it said. The US government wants NVIDIA to be as successful as possible in China, but within performance constraints, Huang said.
This is how NVIDIA stock reacts
NVIDIA’s explosive growth sparked euphoria and price records across industries on Thursday. Technology stocks were in high demand worldwide. The expectation that with artificial intelligence (AI) and the necessary semiconductors and components for it, profits in the industry will skyrocket in the coming years, created a buying mood.
NVIDIA had sales of $22.1 billion in the last quarter, three times as much as a year earlier and almost 10 percent more than experts had expected on average. This rapid growth caused the share price to rise by 15.10 percent in US trading to $776.63. This means that the stock market value of the California company has reached the $2 trillion mark. NVIDIA now only has Apple and Microsoft ahead of it in terms of market value.
A look at the absolute extent of NVIDIA’s price jump shows how much the dimensions in the tech and stock market world are shifting because of AI. The price increase of 12.6 percent on Thursday means a record-high increase in stock market value by more than $200 billion in one fell swoop. That is more than the market capitalization of the German DAX heavyweight SAP.
NVIDIA’s outlook for the current quarter also exceeded expectations. The company promised revenue of around $24 billion. The average market forecast was for around $22 billion.
It is probably above all the optimistic outlook that is driving up tech prices in the USA, Asia and Europe. On the Tokyo Stock Exchange, the semiconductor stocks Advantest and Tokyo Electron rose by 7.5 and 6 percent respectively. On Europe’s stock exchanges, the premiums for ASML, STMicroelectronics and BE Semiconductor reached up to a good 17 percent. Chip producers and their suppliers such as Infineon, AIXTRON and SUSS MicroTec were also in high demand on the German market.
The US stock exchange Nasdaq was recently no longer so sure whether NVIDIA would be able to “deliver”. After all, the price had shot up by 50 percent from the beginning of the year to its record high on February 12th. Even more impressive: the price has increased fivefold since the beginning of 2023. In the last two days, investors let some air out of the stock. But now market strategist Jürgen Molnar from the broker Robomarkets was able to determine: “NVIDIA is turning up the music at the stock market party again.” With the side effect that the generally good mood also pushed the German leading index DAX to a record high.
“NVIDIA is cementing its reputation for setting exceptional growth targets and then exceeding them,” said analyst Derren Nathan from investment firm Hargreaves Lansdown. The boom in artificial intelligence is becoming a hype. The operators of data centers are literally running over the company’s door with their demand for the computing platform called “Hopper”. And dethroning NVIDIA, says Nathan, will be a difficult undertaking given the “incredible complexity” of its products.
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NEW YORK (dpa-AFX)
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