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Thanks to record sales of artificial intelligence chips, Nvidia’s sales rose 262 percent last quarter, exceeding all high expectations. The company’s chief executive said the company’s rapid growth will continue this year with the launch of a new range of chips.
Jensen Huang told investors that the company will generate “a lot” of revenue from its new Blackwell chips this year as it capitalizes on 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 will continue to release newer, more powerful chips at the same pace. “After Blackwell there is another chip and we have a one-year cycle,” he said.
Demand for Nvidia’s AI data center graphics processors has surged over the past year as the biggest tech 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 through 2024.
Revenue for the three months ended April was $26 billion, compared to consensus estimates of $24.7 billion. The huge year-over-year increase was similar to the previous quarter, when growth reached 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 revenue, which is related to the coveted AI chips, rose 427 percent year-over-year to $22.6 billion in the quarter, driven by strong demand for Nvidia’s current-generation Hopper GPUs, Nvidia CFO Colette Kress told investors. Shipments of the Blackwell chip are expected to begin this quarter.
Shares of Nvidia, which have continued their rapid rise of more than 90 percent since the beginning of the year, rose about 6 percent in after-hours trading. The chipmaker also announced a 1-for-10 stock split effective June 7 and announced a 150 percent increase in its quarterly cash dividend.
Ahead of the earnings announcement, traders prepared for big swings in Nvidia shares and markets in general. The stock’s massive rise has made it one of the most watched names on Wall Street. Since the beginning of 2023, their market capitalization has increased more than sixfold and now stands at $2.3 trillion. This means the company has overtaken Google parent company Alphabet and Amazon to become the third most valuable listed US company.
Nvidia has moved quickly to capitalize on the rising demand for AI and stay ahead of competitors and customers developing their own AI chips. In March, the company unveiled its Blackwell chips, which are twice as powerful as the current generation of chips for training AI models and offer five times the performance of “inference” – the speed at which such models can respond to queries. That came just a year after the company unveiled its previous generation of GPU chip architecture, Hopper. Blackwell is scheduled to ship later this year.
Analysts had questioned whether the transition to a new product line could hurt Nvidia’s massive growth in previous quarters by creating a temporary “bubble” in demand. For example, the rapid pace of chip releases has led Amazon to change its plans to order chips based on the last generation of Nvidia’s architecture and replace them with the Blackwell series.
But Huang assured investors that demand for both the Hopper and Blackwell lines is “far above supply,” a situation that is likely to continue “well into next year.”
Diluted earnings per share were $5.98, an increase of more than 600 percent compared to the previous year. The gross margin was 78.4 percent, slightly above the 77 percent forecast by analysts. Net income was $14.9 billion, beating expectations of $13.2 billion.
Rivals AMD and Intel are launching AI data center chips to compete with Nvidia. They are also joining forces with Nvidia’s customers to offer alternatives to its Cuda software platform, cementing their dominant position as chip suppliers.
In April, Intel and AMD reported lackluster first-quarter results and modest guidance, suggesting they are yet to capitalize on explosive demand. On Tuesday, Microsoft announced it would use AMD’s new MI300X accelerator chips and ROCm software to run some of the most demanding AI workloads on its Azure cloud service.
“Nvidia has defeated the data center [revenue] and beat across the board,” said Daniel Newman, CEO of Futurum Group. “The whole market has been waiting for this number and Nvidia has delivered.”
The stock split will create “more accessibility” as well as “additional momentum for the stock,” he added. “AI trading is alive and well.”