Nvidia earnings: AI chip leader shows no signs of stopping mammoth growth
Nvidia, the leading AI chip manufacturer and currently the most valuable company globally, announced its latest quarterly results on Wednesday, much to the satisfaction of its investors. This company continues to drive the surge in artificial intelligence.
The company's worth has jumped by $2.2 trillion this year, reaching a total of $3.6 trillion due to almost doubling its chip sales. They reported revenue of $35.08 billion, surpassing projections of $33.15 billion.
Experts expected Nvidia to announce earnings of $0.75 per share, but the actual figure was $0.81. After the news was released, Nvidia's stock dropped around 5% in after-hours trading, but it quickly recovered. The stock had previously finished the day at $145.89 in New York.
Nvidia's CEO, Jensen Huang, mentioned last week that he anticipates a dramatic boost in computing power for generative AI, predicting it will grow by “a millionfold” in the next ten years. In a recent press release, he stated, “We are in the midst of the AI era, which is driving a worldwide transition to Nvidia technology.”
The rising interest in Nvidia's Blackwell GPU chips seems to have eased concerns that the company might face a drop in demand from major tech companies investing heavily in AI processing and data centers.
Nvidia's stock has surged after a dip in the summer, climbing 45% since hitting a low in August. The chipmaker’s shares have increased almost 200% this year alone and have skyrocketed over 1,100% in the past two years, reaching all-time highs following the election.
However, several of Nvidia's competitors in the chip manufacturing sector are negatively impacting the industry as they find it difficult to keep up with Nvidia's leading position in AI.
Before the results were revealed, Wedbush analyst Dan Ives predicted that Nvidia would again deliver an impressive performance. He stated that Nvidia is essentially the leader in the market, anticipating over $1 trillion in AI investments in the coming years, with its GPUs being likened to vital resources like oil and gold in today’s economy.
The largest technology firms globally have ramped up their spending on artificial intelligence by billions of dollars in recent months, making Nvidia a significant winner in this shift.
Nvidia is viewed by many as a key indicator of the technology industry and the rising need for artificial intelligence, which has contributed to Wall Street reaching several all-time highs this year.
However, the intensification of the conflict between Russia and Ukraine, the possibility of increased global tariffs under Donald Trump's upcoming administration, and the expectation that the Federal Reserve will not lower US interest rates have all contributed to a sense of uncertainty in the markets.
Other experts shared Ives' view that the demand for Nvidia's latest Blackwell chip could significantly boost the company's sales and market value. Charu Chanana, the chief investment strategist at Saxo, pointed out that the indications of "exceptional demand" for the new chip—such as predictions of record-breaking sales and reports of depleted inventories for the upcoming year—are solid evidence of Nvidia’s ongoing strong performance.
However, Chanana cautioned that "if there are any indications of production delays or if demand doesn't meet expectations, it could put pressure on the stock due to its high valuation."
Earlier this week, a report indicated that the chip manufacturer is facing overheating problems with the servers for its latest graphics chips, the B200 and GB200 NVL72. These chips are named after David Harold Blackwell, a well-known American mathematician and statistician.
A representative from Nvidia didn't outright dismiss the report but mentioned that "it's normal and expected to have engineering changes as we progress."
Tech mogul Michael Dell shared that "small details can derail you from major investments at any moment."
