GENAI at the ‘tipping point’: Nvidia revenue surges 265%

Earnings in December quarter surpass expectations; company gives upbeat forecast

Nvidia surged in early trading after delivering another eyepopping sales forecast, adding fresh momentum to a stock rally that already made it the world’s most valuable chipmaker.

Revenue in the current period will be about $24 billion, the company said in a statement Wednesday. Analysts had predicted $21.9 billion on average. The world's largest semiconductor company by value delivered 265 per cent revenue growth in its fourth quarter.

The outlook extends a streak of Nvidia shattering expectations, thanks to insatiable demand for its artificial intelligence accelerators — highly prized chips that crunch data for AI models. The technology has helped power a proliferation of chatbots and other generative AI services, which can create text and graphics based on simple prompts.

“Accelerated computing and generative AI have hit the tipping point,” Chief Executive Officer Jensen Huang said in the statement. “Demand is surging worldwide across companies, industries and nations.” The shares jumped about 13 per cent in premarket trading on Thursday following the announcement. They earlier closed at $674.72 in New York, leaving them up 36 per cent for the year. Nvidia’s market capitalisation increased by more than $400 billion this year — bringing its valuation to $1.7 trillion — as investors bet that the company will remain the prime beneficiary of an AI computing boom. That turned Wednesday’s report into a highly anticipated event for both Wall Street and the tech world. And the numbers — along with the upbeat tone from Huang. Shares of Advanced Micro Devices, Broadcom and Marvell Technology Inc. — three other chipmakers expected to benefit from AI growth — also gained in late trading.

New cycle

On a conference call with analysts, Huang said that demand for Nvidia’s newest products will continue to outstrip supply for the rest of the year. Though supply is growing, demand isn’t showing any signs of slowing, he said.

Nvidia also has had to navigate new export rules for chips headed to China, the largest market for semiconductors. The company has scaled down the capabilities of its products in order to continue to sell to that region, which in the past has accounted for a quarter of revenue. Three months ago, Chief Financial Officer Colette Kress told analysts that the company’s projections would have been higher if it weren’t for the China rules. “We expect it to stay in a similar range in the first quarter,” Kress said Wednesday. The company has begun sending samples of new chips that are compliant with restrictions to Chinese customers, Huang said. That should help business pick up again. “We’re going to do our best to compete in that marketplace and succeed in the marketplace,” Huang said. Nvidia, co-founded by Huang in 1993, got its start as a provider of graphics cards for computer gamers.

THE COMPANY HAS BEGUN SENDING SAMPLES OF NEW CHIPS THAT ARE COMPLIANT WITH RESTRICTIONS TO CHINESE CUSTOMERS. THAT SHOULD HELP BUSINESS PICK UP AGAIN. WE’RE GOING TO DO OUR BEST TO COMPETE IN THE MARKETPLACE AND SUCCEED

JENSEN HUANG, CEO, Nvidia