Nvidia has provided a second-quarter revenue forecast that is more than 50 percent above Wall Street’s estimates, citing increased supply to meet the growing demand for its artificial intelligence (AI) chips, which power services like ChatGPT. Following the announcement, Nvidia’s shares surged as much as 28 percent after trading hours, reaching a record high. This rise in stock market value by approximately $200 billion has solidified Nvidia’s position as the world’s most valuable semiconductor company and the fifth-most valuable company on Wall Street.
The company has faced challenges in meeting the demand for its AI chips, with Elon Musk, CEO of Tesla and reportedly an AI startup founder, recently noting that acquiring graphics processing units (GPUs) is “considerably harder than drugs.” However, Nvidia’s CEO, Jensen Huang, stated in an interview that the company began full production of its latest AI chips in August 2022, providing a supply buffer when chatbot applications gained immense popularity. In response to the steep increase in demand in January, Nvidia placed additional orders and procured substantially more supply to cater to the second half of 2023.
Nvidia’s revenue forecast for the current quarter is $11 billion, with a margin of plus or minus two percent. Analysts had anticipated revenue of $7.15 billion, according to Refinitiv. Analyst Logan Purk from Edward Jones remarked that the ongoing AI gold rush would continue to drive demand for Nvidia’s chips throughout the year.
In the quarter ending on April 30, Nvidia reported adjusted revenue of $7.19 billion, surpassing analysts’ expectations of $6.52 billion. The company’s data center chip sales reached $4.28 billion, exceeding estimates of $3.89 billion. While Nvidia faces competition in AI chips from rivals like AMD and Intel, as well as startups such as Cerebras Systems, CEO Jensen Huang emphasized that Nvidia has transitioned to selling comprehensive AI supercomputing systems to large enterprises. This strategic shift allows companies to benefit from Nvidia’s AI expertise and capabilities, comparable to those of leading tech giants in Silicon Valley.
Nvidia’s net income rose to $2.04 billion, or 82 cents per share, from $1.62 billion, or 64 cents per share, compared to the previous year. Excluding items, the company’s earnings per share for the first quarter were $1.09, surpassing estimates of 92 cents.
