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Nvidia’s revenue soars 262% amid record demand for AI chips

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Record sales of AI chips caused Nvidia’s revenue to soar 262 percent in the latest quarter, beating lofty expectations, and its CEO said its successful growth would continue this year with the launch of a new line of chips.

Jensen Huang told investors that the company would see “a lot” of revenue from its new Blackwell chips this year as it would benefit from growing 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’s another chip and we’re on a one-year pace,” he said.

Demand for Nvidia AI data center graphics processing units has skyrocketed in the past year as the largest technology companies rush to develop the computing infrastructure needed to deliver powerful new AI products at scale. Google, Microsoft, Meta and Amazon have indicated that their spending will remain high through 2024.

Revenue for the three months to the end of April was $26 billion, versus consensus estimates of $24.7 billion. The huge year-on-year increase was similar to the previous quarter, when growth reached 265 percent. For the current quarter, Nvidia expects revenue of about $28 billion, up 2 percent or so, compared with consensus estimates of $26.8 billion.

Nvidia’s data center revenue, which relates to its coveted AI chips, rose 427 percent year over year during the quarter to $22.6 billion, 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.

Nvidia shares, which have extended their dizzying rise by more than 90 percent since the beginning of the year, rose about 6 percent in after-hours trading. The chipmaker also announced a 10-for-1 stock split effective June 7 and said it would increase its quarterly cash dividend by 150 percent.

Ahead of the results announcement, traders were bracing for big swings in Nvidia stock and the broader markets. The stock’s huge rally has made it one of the most closely watched names on Wall Street. Since the beginning of 2023, its market capitalization has increased more than six-fold to $2.3 trillion, surpassing Google parent Alphabet and Amazon to become the third most valuable company listed in the United States.

Nvidia has been moving quickly to capitalize on the increased demand for AI and stay ahead of competitors and customers that are developing their own AI chips. In March it unveiled its Blackwell chips, which it says are twice as powerful as the current generation of chips for training AI models and offer five times the performance in “inference” – the speed at which such models can respond to questions. queries. This came just a year after the company revealed its previous generation of GPU chip architecture, Hopper. The Blackwell is expected to begin shipping later this year.

Analysts had questioned whether the transition to a new product line could dent the huge year-over-year growth Nvidia posted in previous quarters, as a temporary “air pocket” in demand emerges. The rapid pace of release of its chips has led, for example, Amazon to change its plans to order chips based on the latest generation of Nvidia’s architecture and replace them with the Blackwell line.

But Huang assured investors that demand for the Hopper and Blackwell lines was “well ahead of supply,” a situation that would likely continue “well into next year.”

Diluted earnings per share were $5.98, more than 600 percent higher than a year ago. Gross margin was 78.4 percent, slightly better than the 77 percent analysts had forecast, with net income of $14.9 billion, above expectations of $13.2 billion.

Rivals AMD and Intel have been deploying AI data center chips to compete with Nvidia’s, as well as joining forces with Nvidia customers to offer alternatives to its software platform, Cuda, which cements its dominance as a provider of chips.

In April, Intel and AMD announced lackluster first-quarter results and modest guidance, suggesting they have yet to reap the benefits of exploding demand. On Tuesday, Microsoft announced that it would use AMD’s new MI300X accelerator chips and its ROCm software to run some of the most demanding AI workloads on its Azure cloud service.

“Nvidia outperformed in the data center (revenue) and outperformed across the board,” said Daniel Newman, CEO of The Futurum Group. “The entire market was waiting for this figure and Nvidia delivered.”

The stock split would create “more accessibility” as well as “additional momentum for the stock,” he added. “AI trading is alive and well.”

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