Nvidia's Upbeat Sales Forecast Demonstrates AI Boom's Continued Momentum
Nvidia Corp., the world's most valuable company, has delivered another robust quarterly revenue forecast, indicating that the extensive expansion of artificial intelligence computing infrastructure is progressing steadily. The chipmaker announced on Wednesday that fiscal first-quarter sales are expected to reach approximately US$78 billion, a figure that notably exceeds the average Wall Street estimate of US$72.8 billion, as compiled by Bloomberg data.
CEO Jensen Huang Highlights AI Compute Investment Surge
In a statement, Chief Executive Jensen Huang emphasized the accelerating investments in AI compute, describing it as the foundational infrastructure powering the AI industrial revolution and future growth. "Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth," Huang stated, reinforcing the company's optimistic outlook.
This forecast has helped alleviate anxieties about a potential bubble in AI investments. Huang has consistently addressed concerns that the surge in spending on artificial intelligence hardware might not be sustainable, arguing that it will require years to upgrade the global installed base of older computers with more productive systems.
Market Response and Financial Performance
Despite some investors growing cautious and divesting from stocks like Nvidia, Wednesday's report suggests that near-term apprehensions may be overstated. Following the announcement, Nvidia shares, which had been among the ten worst-performing chipmaker stocks this year, rose about four percent in extended trading.
In the fiscal fourth quarter, which concluded on January 25, revenue surged 73 percent to US$68.1 billion. Profit, excluding certain items, reached US$1.62 per share, outperforming analyst predictions of US$65.9 billion in sales and US$1.53 per share in earnings. Additionally, adjusted gross margin stood at 75.2 percent, slightly surpassing estimates.
Nvidia's Dominance in AI Accelerator Market
Nvidia maintains a leading position as the primary supplier of accelerator chips, which are essential for processing the vast datasets required to develop artificial intelligence models. These semiconductors are also utilized in the inference phase, where software executes tasks based on real-world inputs. The company has expanded its portfolio to include general-purpose processors, networking solutions, and complete computer systems, further solidifying its influence over customers.
The data center unit, responsible for Nvidia's industry-leading AI accelerator and networking products, reported revenue of US$62.3 billion in the quarter, compared to an average analyst estimate of US$60.4 billion.
Addressing Supply Chain Challenges
A significant concern within the tech industry has been a shortage of memory chips, critical components for devices ranging from smartphones to supercomputers. Supply constraints have driven up memory prices and complicated shipping schedules this year. However, Santa Clara, California-based Nvidia assured in its report that the company has adequately secured inventory and capacity to meet demand beyond the next several quarters, mitigating potential disruptions.
This strategic preparedness underscores Nvidia's commitment to sustaining growth amidst global supply chain pressures, reinforcing its pivotal role in the ongoing AI revolution.
