Thanks to the uninterrupted boom at artificial intelligence
(KI), Nvidia has exceeded market expectations with its financial figures and outlook. Sales in the past second quarter amounted to 13.5 billion dollars, the most valuable listed chip manufacturer announced on Wednesday after the US stock market closed. About eleven billion had been expected. For the current third quarter, sales should then be around $16 billion, while experts surveyed by Refinitiv assume $12.6 billion. Nvidia also announced a $25 billion share buyback program.
Nvidia chips and software are particularly well suited for applications based on artificial intelligence. Among other things, they are used to teach AI programs such as the chatbot ChatGPT. This has been driving demand for the technology – and Nvidia’s share price – for months.
Share price has tripled in the current year
The group’s shares rose in after-hours trading by 8 percent to an all-time high. They pulled other chipmakers and tech stocks up with them, including Microsoft and Meta. The Nvidia stock
initially continued to soar and gave CEO Jensen Huang (60) a rain of money. The price rally made Huang, who grew up in rather poor circumstances, richer by 4.2 billion dollars. As a native Taiwanese who emigrated to the USA with his family and founded Nvidia in 1993 after working for AMD, he embodies the American Dream
. His wealth increased as the price rose according to Bloomberg
to $46 billion. If the gains prove sustainable, Huang could become one of the 25 richest people in the world. He holds a 3.5 percent stake in Nvidia.
In May, surprisingly strong quarterly results gave the stock a daily gain of more than 24 percent. Shortly thereafter he broke through Market value for the first time the wall of one trillion dollars. The group is the only chip manufacturer in this club. So far this year, Nvidia stock has tripled in value. The titles belong, for example, to those of Apple, Microsoft and Tesla to the so-called “Magnificent Seven” (“the glorious seven”), i.e. companies that have had a significant part in the increase of more than 14 percent in the S&P 500 index this year.
Nvidia is by far the largest supplier of special chips for computationally demanding AI applications. Huang spoke of a change in the computer industry towards accelerated computing processes and generative AI. Analysts estimate that demand for Nvidia’s chips in this sector exceeds supply by at least 50 percent. This imbalance is therefore likely to persist for the coming quarters. It is also expected that competitor AMD will snatch market share from Nvidia in the coming year. However, according to analysts, Nvidia’s CUDA software is years ahead of AMD’s ROCm variant.
There was a particularly large jump in the last quarter in the business with technology for data centers. Revenue for the division rose 171 percent year-on-year to $10.32 billion. Many AI applications are running in data centers and the systems are therefore being upgraded with more and more Nvidia chips. The gaming business with Nvidia graphics cards grew by 22 percent to $2.49 billion. They were once a major growth driver because they were used to create cryptocurrencies.
Nvidia spoke out against tightening US restrictions on semiconductor deliveries China out of. The current measures served their purpose, said CFO Colette Kress (54). At Nvidia, revenue from China accounted for between 20 and 25 percent of data center business as usual in the past quarter. In view of the worldwide demand, Nvidia does not expect any immediate significant losses, even in the event of further possible restrictions. But in the long term this will destroy the chances of the US chip industry in the huge Chinese market.