Nvidia’s revenue jumped 262% on record demand for AI chips

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Record sales of artificial intelligence chips drove Nvidia’s revenue to jump 262 percent in the latest quarter, beating high expectations, and its CEO said its blockbuster growth will continue this year with the launch of a new line of chips.

Jensen Huang told investors the company will get “a lot” of revenue from its new Blackwell chips this year as it cashes in on explosive 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. “There’s another chip after Blackwell and we’re on a one-year streak,” he said.

Demand for Nvidia GPUs for AI data centers has soared in the past year as the biggest tech 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 in 2024.

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

Nvidia’s data center revenue, which is tied to its coveted AI chips, rose 427% year-over-year in the quarter to $22.6 billion, driven by strong demand for Nvidia’s current generation of Hopper GPUs, the chief told investors Nvidia CFO Colette Kress. Shipments of the Blackwell chip are expected to begin this quarter.

Shares of Nvidia, which extended a meteoric rise of more than 90 percent since the start of the year, were up about 6 percent in after-market trading. The chipmaker also announced a 10-for-1 stock split, effective June 7, and said it was raising its quarterly cash dividend by 150 percent.

Ahead of the results, traders were bracing for big swings in Nvidia stock and the markets in general. The stock’s massive rally has made it one of the most watched names on Wall Street. Since the start of 2023, its market capitalization has increased more than sixfold to $2.3 trillion, overtaking Google parent Alphabet and Amazon to become the third most valuable company listed in the US.

Nvidia is moving quickly to take advantage of the surge in AI demand and stay ahead of competitors and customers who are developing their own AI chips. The company unveiled its Blackwell chips in March, 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 of inquiries. This comes just a year after the company unveiled its previous generation GPU chip architecture, the Hopper. The Blackwell is expected to begin shipping later this year.

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

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

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

Rivals AMD and Intel are launching AI data center chips to compete with Nvidia’s, as well as joining forces with Nvidia’s customers to offer alternatives to its software platform, Cuda, cementing its dominance as a vendor on chips.

In April, Intel and AMD reported weak first-quarter results and modest guidance, suggesting they have yet to reap the benefits of the demand explosion. On Tuesday, Microsoft announced that it will 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 beat the data center [revenue] and wins across the board,” said Daniel Newman, CEO of The Futurum Group. “The whole market was waiting for this number and Nvidia delivered.”

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

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