Nvidia blows away earnings expectations as AI chipmaker dominates the market

Nvidia blows away earnings expectations as AI chipmaker dominates the market

Nvidia, the leading chipmaker for artificial intelligence (AI) applications, has reported a record-breaking quarter of revenue and profit, beating Wall Street expectations and sending its shares to an all-time high. The company saw its gross margin expand over 25 percentage points versus the same quarter last year to 71.2% — incredible for a physical product. Nvidia also said that it sees demand remaining high through next year and said it has secured increased supply, enabling it to increase the number of chips it has on hand to sell in the coming months.

Jensen Huang, CEO of Nvidia, shows the old and new computers for autonomous vehicles at his keynote address at CES in Las Vegas

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Nvidia’s overalL sales grew 101% on an annual basis to $13.51 billion in its second fiscal quarter, which ended July 30, the company announced Wednesday. Not only is it selling a bunch of AI chips, but they’re more profitable, too: The company reported an incredible $6.7 billion in net income in the quarter, a 422% increase over the same time last year. Analysts expects Nvidia, which dominates the market for chips used to power generative AI like ChatGPT and many such services, to forecast 110% growth in third-quarter revenue to $12.50 billion when it reports results on Wednesday.

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Nvidia’s prodigious cashflow contrasts with its top customers, which are spending heavily on AI hardware and building multi-million dollar AI models, but haven’t yet started to see income from the technology. However, Nvidia has been investing in other AI-related stocks, such as Arm Holdings and Recursion Pharmaceuticals, as well as compiling its technology into expensive and complicated systems like its HGX box, which combines eight H100 GPUs into a single computer. Nvidia’s AI story is what is driving the market right now, and if Nvidia were to miss expectations, this market would be in a world of pain.

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Source : QUARTZ

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