US chip giant Nvidia, whose products play a crucial role in artificial intelligence systems, crushed expectations on Wednesday, as the post-ChatGPT AI frenzy continues to lift the tech sector.
The Silicon Valley-based company said sales doubled year-on-year to $13.5 billion in the latest completed quarter, leaving a net profit of $6.2 billion -- an eye-watering 843 percent higher than a year before.
Signaling that the boom in AI is still going strong, Nvidia said revenue in the current quarter would ramp up further to $16 billion.
"A new computing era has begun," Nvidia CEO Jensen Huang said after the stellar earnings report.
"Together accelerated computing and generative AI are driving a broad based computer industry platform shift. Our demand is tremendous," he said on an analyst call.
Nvidia's stock rose more than 8 percent following the results. This year, the company's share price has more than tripled.
Nvidia's quintessential position in delivering artificial intelligence has made it a bellwether on the generative AI frenzy that took hold of the tech world after the release of ChatGPT late last year.
As the wave began to build, the company already wowed Wall Street with spectacular earnings earlier in the year, helping transform Nvidia into a trillion dollar company based on market capitalization, a rare perch shared only by a handful of giants.
"The entire tech sector and overall market was waiting for Nvidia with this being the purest and best barometer for AI demand," said Dan Ives of Wedbush Securities.
In the end, the earnings "were a 'drop the mic' moment that will have a ripple impact for the tech space for the rest of the year," he said.
Riding high on his success, Huang, who is known for always wearing a black leather jacket, urged companies to shift their spending away from classic computing and embrace AI.
"AI provides a new way of generating productivity, a new way of generating new services to offer to your customers and accelerated computing helps you save money and save power," Huang said.
Nvidia manufactures graphics processing units (GPUs), a powerful chip technology that is necessary to build the generative AI that delivers ChatGPT as well as image, facial and speech recognition.
The company also offers AI-focused computers and services making it an unparalleled one-stop shop for AI.
Originally designed for video game graphics, each of Nvidia's GPU chips cost tens of thousands of dollars and companies are scrambling to stock up as the pressure to keep up with the AI revolution grows.
- Supply crunch? -
Customers have struggled to get their hands on Nvidia's AI chips as startups, big companies, governments and cloud providers ramp up orders and hoard stock.
Elon Musk, who this year started his own AI company, has said that GPUs "are considerably harder to get than drugs" at the moment, with buyers even looking to buy components from struggling cryptocurrency companies that also use GPUs.
Some fear that Nvidia may eventually struggle to meet demand with crucial components from Taiwan's TSMC chip-making plants hard pressed to meet Nvidia's needs.
Nvidia doesn't actually make its own chips, but rather designs them and then outsources the manufacturing to other companies. It is therefore vulnerable to chokepoints in its complex supply chain.
Nvidia's strategic role in AI saw the United States government last year place export restrictions on the company's highest
performing chips, which forced the it to make slower versions for the Chinese market.
The White House is considering additional export curbs that could further limit Nvidia's access to the Chinese market.
In an analyst call, Nvidia CFO Colette Kress warned against the US cracking down harder, saying it "will result in a permanent loss of an opportunity for the US industry to compete and lead in one of the world's largest markets."
Artificial Intelligence Analysis
Defense Industry Analyst:
8/10
Stock Market Analyst:
9/10
General Industry Analyst:
8/10
Analyst Summary
: US chip giant Nvidia has reported an eye-watering 843% increase in net profits for the latest quarter, with sales doubling year-on-year to $1
3.5 billion. This impressive performance is indicative of the ongoing boom in AI, which has seen Nvidias stock price triple this year and the companys market capitalization reach a trillion dollars. Nvidias impressive results have been seen as a bellwether of the generative AI frenzy that has taken hold of the tech world in the wake of the release of ChatGPT. The companys CEO Jensen Huang has urged companies to shift their spending away from classic computing towards AI, which has been identified as a potential factor in the tech sectors continued success.The growth of the AI industry in the past 25 years has been exponential, with the technology becoming increasingly sophisticated and pervasive. This growth has been driven by the emergence of powerful chips like Nvidias, which are now being used in a wide range of applications. The success of Nvidia is indicative of the wider trends in the space and defense industry over the past 25 years, showing the potential for AI to revolutionize the way in which we interact with technology.Investigative Question:
- 1. What are the implications of Nvidias success for other chip manufacturers?
- 2. What other sectors are likely to be impacted by the increased prevalence of AI?
- 3.
How has the AI industry evolved over the past 25 years, and what has been the key drivers of this evolution?4. What impact will the surge in AI have on the global economy?
5. How will the advances in AI affect the development of new technologies and applications?
This AI report is generated by a sophisticated prompt to a ChatGPT API. Our editors clean text for presentation, but preserve AI thought for our collective observation. Please comment and ask questions about AI use by Spacedaily. We appreciate your support and contribution to better trade news.
