The demand for the company’s data center chips and graphics processing units (GPUs) is already substantial and continues to increase as businesses rush to enhance their AI capabilities. Nvidia’s chips are predominant in the global AI chip market, with notable customers like Microsoft.
Investing.com analyst Thomas Monteiro remarked, “The market was ready to react to Nvidia’s earnings news, considering the high expectations and changing macro conditions.”
Monteiro added, “Once again, Nvidia has proven that the AI surge is not just a stock market trend but a significant focus for corporations worldwide at present.”
Foxconn, an Apple supplier, to construct ‘AI factories’ utilizing Nvidia’s chips and software
Following Nvidia’s earnings report, the late-day surge in stock prices boosted the company’s market capitalization by over US\(129 billion, leading to an increase in the stock value of other AI-related firms, including chip designer Arm Holdings. The collective market value of Nvidia and other AI hardware suppliers rose by US\)160 billion.
Nvidia projected a 233% growth in first-quarter revenue, surpassing Wall Street’s expectations of 208% growth.
For the first three quarters of 2023, Nvidia consistently exceeded analyst revenue estimates by 10% to 20%.
Despite the positive outlook, some analysts raised concerns about the sustainability of Nvidia’s rapid growth pace.
Nvidia’s forecast for the current quarter’s revenue is US\(24.0 billion, with a variance of 2%. Analysts, on average, anticipated revenue of US\)22.17 billion, according to LSEG data.
The data center segment, which is Nvidia’s largest revenue contributor, experienced a 409% growth to US\(18.4 billion in the fiscal fourth quarter, surpassing estimates of US\)16.8 billion. Data center revenue had grown nearly 280% in the previous quarter.
Nvidia CEO Jensen Huang recently spoke at the World Governments Summit in Dubai, United Arab Emirates. Photo: Reuters
While Nvidia’s supply chains are gradually improving to meet the surging chip demand, CEO Jensen Huang acknowledged the company’s current inability to fully satisfy demand as production scales up.
Ben Bajarin, CEO of consulting firm Creative Strategies, noted, “(The) key growth concern is the ongoing supply constraints and the long-term demand outlook.”
In the fourth quarter, Nvidia reported revenue of US\(22.10 billion, surpassing estimates of US\)20.62 billion. Adjusted earnings for the quarter were US\(5.16 per share, compared to estimates of US\)4.64 per share, as per LSEG data.
Nvidia anticipates a first-quarter adjusted gross margin of 77%, with a variance of 50 basis points. Analysts, on average, predicted a gross margin of 75.6%.
An Nvidia office building located in Santa Clara, California. Photo: AP Photo
On average, about US\(30 billion worth of Nvidia shares were traded daily as of February 20 over the past 30 sessions, surpassing electric vehicle manufacturer Tesla, which averaged US\)22 billion per day during the same period.
Nvidia disclosed in a filing that it had received inquiries from antitrust regulators in France, the European Union, the United Kingdom, and China regarding its GPU sales and supply allocation efforts. The company anticipates additional inquiries from antitrust regulators in the future.
In December, US commerce secretary Gina Raimondo stated that the Biden administration was in talks with Nvidia regarding the permissible sale of AI chips to China. Raimondo confirmed discussions with Nvidia’s CEO, Huang, who expressed commitment to complying with the commerce department’s regulations.
