Nvidia, the chipmaker at the center of the artificial intelligence boom, once again gave an optimistic sales forecast, showing that spending on artificial intelligence computing remains strong.
The company said Wednesday that second-quarter revenue was about $28 billion. Analysts on average forecast a dollar size of $26.8 billion, according to data compiled by Bloomberg. Results for the fiscal first quarter ended in April also exceeded expectations.
“The next industrial revolution has begun,” CEO Jen-Hsun Huang said in a statement, echoing one of his favorite themes. “Artificial intelligence will deliver significant productivity gains in nearly every industry, helping companies improve cost and energy efficiency while expanding revenue opportunities.”
The optimistic outlook solidifies Nvidia’s position as the biggest beneficiary of artificial intelligence spending. The company’s so-called artificial intelligence accelerators — chips that help data centers develop chatbots and other cutting-edge tools — have become hot commodities over the past two years, causing its sales to soar. Nvidia’s market capitalization has also soared, exceeding $2.3 trillion.
The stock rose about 4% in after-hours trading Wednesday. The company’s shares are up 92% at the close of the year as investors hope the company will continue to beat expectations.
The Santa Clara, Calif.-based company also announced a 10-for-1 stock split and raised its quarterly dividend 150% to 10 cents a share.
Nvidia was co-founded by Jensen Huang in 1993 as a company that provided graphics cards for computer gamers. He recognized that the company’s chips were ideal for developing artificial intelligence software, which helped him open up a new market and put him ahead of his competitors.
OpenAI’s ChatGPT was released in 2022 and subsequently sparked a race among major technology companies to build their own AI infrastructure. The battle has made Nvidia’s H100 accelerator a must-have. Each wafer sells for tens of thousands of dollars and is often in scarce supply.
But most of this new revenue comes from a handful of customers. A group of four companies — Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Alphabet Inc.’s Google — is Nvidia’s top buyer, accounting for about 40% of sales. Huang, 61, is trying to expand his bet by producing complete computers, software and services aimed at helping more businesses and government agencies deploy their own artificial intelligence systems.
In the first fiscal quarter, Nvidia’s revenue more than tripled to $26 billion. Excluding certain items, profit per share was $6.12. Analysts had forecast sales of about $24.7 billion and earnings per share of $5.65.
Nvidia’s data center segment – currently its largest source of sales – generated $22.6 billion in revenue. Gaming chips provided $2.6 billion. Analysts gave a target of US$21 billion for the data center sector and US$2.6 billion for the gaming sector.
Nvidia stressed on Wednesday that it wants to sell its technology to a broader market — beyond the cloud computing giants known as hyperscalers. Huang said artificial intelligence is moving to consumer Internet companies, automakers and health care customers. Countries are also developing their own systems—a trend called sovereign artificial intelligence.
These opportunities are “creating multiple multi-billion dollar vertical markets” outside of cloud service providers, he said.
Still, hyperscalers were a key growth driver for Nvidia last quarter. Their revenue accounts for approximately 45% of the company’s data center revenue. This shows that Nvidia is in the early stages of diversifying its business.
Huang said the company’s new chip platform, called Blackwell, is now in full production. It lays the foundation for generative artificial intelligence capable of processing trillions of parameters. “We’re ready for the next wave of growth,” he said.
