AI profiteer NVIDIA presented the key figures for the past quarter on Wednesday evening after the US stock market closed
The AI boom is causing the business of the chip group NVIDIA to grow explosively. The Silicon Valley company doubled its sales year-on-year to $13.5 billion last quarter. Here the analyst forecasts were previously at 11.14 billion US dollars. Profits jumped from $656 million to just under $6.2 billion (5.7 billion euros). According to this, the chip giant has made earnings of $2.70 per share over the past three months. That was more than experts had expected in advance ($2.08 per paper). In the year-ago quarter, EPS was $0.51. NVIDIA boss and co-founder Jensen Huang sees a new computing era dawning.
NVIDIA chips and software are particularly well suited for applications based on artificial intelligence. Among other things, they are used to teach AI programs such as the chatbot ChatGPT. That’s been driving demand for the technology — and NVIDIA’s share price — for months. The stock is more than three times what it was at the beginning of the year. This makes NVIDIA worth around $1.2 trillion on the stock market. By way of comparison, the long-dominant semiconductor giant Intel weighs in at just over $143 billion.
In US trading on Thursday, NVIDIA shares rose 0.10 percent to $471.63 after climbing to a new record high of over $500.
For comparison: In October 2022, the papers had fallen to almost $100. In 2015 they were available for $5.
The company exceeded the already high expectations of the analysts both with the figures for the past quarter and with the forecast for the third business quarter running until the end of October. NVIDIA expects sales to increase further to around $16 billion. The company had realized almost as much in the entire financial year that ended at the end of January 2021.
In the world’s data centers, a “long-term change” from classic processors to the chip architectures offered by NVIDIA is currently evident, Huang emphasized. The demand is huge.
The business potential with chips for data centers is enormous against the background of the AI boom and is also still in an early phase, explained analyst Stacy Rasgon from Bernstein Research in a first reaction to the current business figures.
One concern from analysts was that NVIDIA might not be able to secure enough manufacturing capacity from contract manufacturers. The numbers allayed such concerns.
The “Financial Times” reported, citing informed people, that NVIDIA wants to produce and sell 1.5 to 2 million of its H100 processors used for AI applications in the coming year. An H100 processor is reported to cost up to $30,000 – and customers often buy more expensive systems from NVIDIA that bundle several of them together.
There was a particularly large jump in the last quarter in the business with technology for data centers. Revenue for the division rose 171 percent year-on-year to $10.32 billion. Many AI applications are running in data centers and the systems are therefore being upgraded with more and more NVIDIA chips.
The gaming business with NVIDIA graphics cards grew by 22 percent to $2.49 billion. They were once a major growth driver because they were used to create cryptocurrencies.
NVIDIA spoke out against tightening US restrictions on semiconductor shipments 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 as usual in the past quarter.
In view of the worldwide demand, NVIDIA does not expect any immediate significant losses, even with further possible restrictions. But in the long term this will destroy the chances of the US chip industry in the huge Chinese market. NVIDIA is currently only allowed to sell a slimmed down version of the H100 processors with the name H800 to China.
NVIDIA wows analysts
Excellent business figures and a very optimistic outlook from NVIDIA once again massively fueled the market mood for the shares of the US semiconductor company on Thursday. Euphoric comments and praise hailed from analysts and industry insiders.
“Long live the AI king,” headlined expert Matthew Prisco from the analysis house Evercore ISI. NVIDIA has once again exceeded expectations “monsterly”. Capital market strategist Jürgen Molnar from RoboMarkets spoke of brilliant numbers and a gigantic outlook for the chip and graphics card manufacturer. The stock exchange highflyer of the year not only delivered, but literally pulverized the expectations of the market.
Sophie Lund-Yates, an analyst at Hargreaves Lansdown, sees a “seemingly insatiable appetite” for the company’s products: “The boom in artificial intelligence continues to catapult demand for the tech company’s complex chips into the stratosphere.” According to Bernstein expert Stacy Rasgon, NVIDIA stock remains “the best way to play the AI theme.” The business potential with chips for data centers is enormous against the background of the boom and is also still in an early phase.
Despite high expectations, the US semiconductor company once again managed to exceed forecasts for the second quarter, praised Deutsche Bank analyst Ross Seymore. UBS expert Nicolas Gaudois also assessed the development as positive for the global technology industry. The bold outlook for the third fiscal quarter should reassure investors amid recent concerns about potential short-term supply chain bottlenecks.
NVIDIA is currently valued at around $1.2 trillion on the stock exchange, putting it close to online retail giant Amazon at $1.4 trillion. Apple remains the most valuable company with a market capitalization of around $2.8 trillion. By way of comparison, the long-dominant semiconductor giant Intel weighs in at just over $143 billion.
Bernstein Raises Target for NVIDIA to $675 – ‘Outperform’
The US analysis company Bernstein Research has raised the price target for NVIDIA from 475 to 675 US dollars according to quarterly figures and left the rating at “Outperform”. The chip company has clearly exceeded expectations, wrote analyst Stacy Rasgon in a study available on Thursday. The business potential with chips for data centers is enormous against the background of the AI boom and is also still in an early phase.
JPMorgan Raises Target for NVIDIA to $600 – ‘Overweight’
The US bank JPMorgan has raised the price target for NVIDIA from 500 to 600 US dollars after quarterly figures and left the rating at “Overweight”. The expansion of generative artificial intelligence (AI) and large language and translator models are driving the expanding demand for the chipmaker’s network platforms and software solutions, analyst Harlan Sur wrote in a study available on Thursday. Expectations were high before the figures were released and NVIDIA exceeded them thanks to very high demand for chips for data centers. The outlook for the new quarter is also better than expected.
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