Nvidia Corp chief executive officer Jensen Huang (黃仁勳) said he expects the artificial intelligence (AI) boom would last well into next year and made what could be the largest single bet yet in the tech sector to back up his optimism.
The company’s sales forecast on Wednesday blew past Wall Street’s expectations and it said it would buy back another US$25 billion of its shares, a move most companies make when their leadership thinks the company is undervalued.
However, Nvidia’s stock price has more than tripled this year and was set to hit an all-time high after Wednesday’s results.
Photo: Sam Yeh, AFP
Nvidia said it plans to ramp up production of its hardware into next year, quashing doubts that a few analysts had raised about how long the AI craze could last. The company has a near-monopoly on the computing systems used to power services such as ChatGPT, OpenAI’s blockbuster generative AI chatbot.
“We have excellent visibility through the year and into next year, and we’re already planning the next-generation infrastructure with leading [cloud computing firms] and data center builders,” Huang told investors on a conference call.
In an interview with Reuters, Huang said two things are driving that demand: a switch from traditional data centers that were built around central processors to ones built around Nvidia’s powerful chips, and the rising use of content generated by AI systems in everything from legal contracts to marketing materials.
“These two fundamental trends are what’s behind everything that we’re seeing, and we’re about a quarter into it,” he said.
“It’s hard to say how many quarters are ahead of us, but this fundamental shift is not going to end. This is not a one-quarter thing,” he added.
Demand for AI chips has given Nvidia the cash for the investor payday. The company reported its adjusted gross margins nearly doubled to 71.2 percent in the second quarter, when most semiconductor companies have gross margins between 50 and 60 percent.
Summit Insights Group analyst Kinngai Chan (陳金蓋) said Nvidia’s inventory of US$4.32 billion is “light.”
“We think [Nvidia] will continue to beat the US$16 billion guide for the October quarter as demand continues to outstrip supply,” Chan said, referring to the company’s third-quarter revenue outlook.
However, some analysts do not see unlimited demand.
SemiAnalysis chief analyst Dylan Patel said many tech companies are spending heavily on Nvidia graphics processing units (GPUs) this year before determining how they would actually make money off products developed with those chips.
“They must overinvest in GPUs or risk missing the boat. At some point the true use cases will shake out, and many of these players will stop investing, though others will likely continue accelerating investment,” Patel said.
Huang declined to comment on whether the AI boom would last past next year.
He said the biggest risk Nvidia faces is securing supplies and the company is doing everything it can to stay on top of surging demand.
Although Nvidia did not give long-term projections on Wednesday, Huang said that supply would “substantially increase for the rest of this year and next year.”
The company relies on vendors such as Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co for components.
“We’re focused on increasing our supply,” Huang said. “We have to do that with great urgency, and we are.”
The company said the biggest sales driver this quarter was its HGX system, which is an entire computer built around Nvidia’s chip. That system is much more complex than just the chip itself, and any missing piece can delay shipments.
“We’re getting great cooperation from our supply chain, and it’s a complicated supply chain,” Huang said.
“People think it’s a GPU chip. But it’s a very complicated GPU system. It’s 70 pounds [31.75kg]. It’s 35,000 components. It’s US$200,000,” he said.
Additional reporting by Bloomberg
STEADY: Prices are to rebound following inventory rebuilding demand, TrendForce said, with Samsung Electronics Co further trimming capacity as it slashes DDR4 lines The contract prices of DRAM chips are to rise by as much as 18 percent sequentially this quarter — the first price upticks in about eight quarters — driven mainly by inventory rebuilding demand for DRAM chips used in mobile devices and PCs, TrendForce Corp (集邦科技) projected yesterday. The price rebound is led by a quarterly increase of mobile DRAM chips, which are to climb between 13 percent and 18 percent quarter-on-quarter this quarter, which has not been seen since the fourth quarter of 2021, the Taipei-based market researcher predicted. Likewise, the price of mainstream PC DDR4 DRAM is expected to bounce
SOLID FOUNDATION: Given its decades of expertise in megatronics, manufacturing and robotics, Japan has the wherewithal to create its own AI, Jensen Huang said Nvidia Corp plans to help build an artificial intelligence (AI) tech-related ecosystem in Japan to meet demand in a country eager to gain an edge in this emerging technology. The US company will seek to partner with Japanese research organizations, companies and start-ups to build factories for AI, Nvidia CEO Jensen Huang (黃仁勳) said yesterday during opening remarks in a meeting with Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura. The company is to set up an AI research laboratory, and invest in local start-ups and educate the public on using AI, Huang said. Huang earlier this week met with Japanese Prime
A Hong Kong court postponed a court hearing on troubled Chinese property developer Evergrande Group’s (恆大集團) winding-up petition scheduled for yesterday until Jan. 29. Evergrande is trying to win support from its creditors for a plan to restructure more than US$300 billion in debt to stave off liquidation. The company’s lawyer told the court it was requesting an adjournment to “refine” its new debt restructuring plan. The Hong Kong High Court has postponed the hearing over Evergrande’s potential liquidation several times. Judge Linda Chan (陳靜芬) had said in October that yesterday’s hearing would be the last before a decision is handed down. Chan
Huawei Technologies Co (華為) is among a field of “very formidable” competitors to Nvidia Corp in the race to produce the best artificial intelligence (AI) chips, Nvidia chief executive officer Jensen Huang (黃仁勳) said yesterday. Huawei, Intel Corp and an expanding group of semiconductor start-ups pose a stiff challenge to Nvidia’s dominant position in the market for AI accelerators, Huang told reporters in Singapore. Shenzhen-based Huawei has grown into China’s chip tech champion and returned to the spotlight this year with an advanced made-in-China smartphone processor. “We have a lot of competitors, in China and outside China,” Huang said. “Most of our competitors
RSS