Nvidia Corp on Wednesday overshot Wall Street estimates, as its profit skyrocketed bolstered by its dominance in chipmaking, which has made the company an icon of the artificial intelligence (AI) boom.
Its net income rose more than sevenfold from US$2.04 billion a year earlier to US$14.88 billion in its first quarter. Revenue more than tripled from US$7.19 billion the previous year to US$26.04 billion.
“The next industrial revolution has begun,” Nvidia CEO Jensen Huang (黃仁勳) said on a conference call with analysts.
Photo by Joel Saget, AFP
Companies buying Nvidia chips would use them to build a new type of data center, designed to produce a new commodity: AI, Huang said, calling them “AI factories.”
Training AI models is becoming a faster process, as they learn to become “multimodal” — that is, capable of understanding text, speech, images, video and 3D data — and able to “reason and plan,” Huang added.
The company reported earnings per share — adjusted to exclude one-time items — of US$6.12, well above the US$5.60 that Wall Street analysts had expected, FactSet said.
Nvidia also announced a 10-for-1 stock split, a move that it said would make its shares more accessible to employees and investors.
The company increased its dividend from US$0.04 a share to US$0.10.
Nvidia shares rose 6 percent in after-hours trading to US$1,006.89 on Wednesday. The stock has risen more than 200 percent in the past year.
The company now boasts the third-highest market value on Wall Street, behind only Microsoft Corp and Apple Inc.
“Nvidia defies gravity again,” Emarketer analyst Jacob Bourne said of the quarterly report.
While many tech companies are eager to reduce their dependence on Nvidia, which has achieved a level of hardware dominance in AI rivaling that of earlier computing pioneers such as Intel Corp, “they’re not quite there yet,” Bourne said.
Demand for generative AI systems that can compose documents, make images and serve as increasingly lifelike personal assistants has fueled astronomical sales of Nvidia’s specialized AI chips over the past year.
Tech giants Amazon.com Inc, Google, Meta Platforms Inc and Microsoft Corp have signaled that they would need to spend more in coming months on the chips and data centers needed to train and operate their AI systems.
What happens after that could be another matter.
Some analysts believe that the breakneck race to build those huge data centers would eventually peak, potentially spelling trouble for Nvidia in the aftermath.
“The biggest question that remains is how long this runway is,” Third Bridge analyst Lucas Keh said.
AI workloads in the cloud would eventually shift from training to inference, or the more daily task of processing fresh data using already trained AI systems, Keh said.
Inference does not require the level of power provided by Nvidia’s expensive top-of-the-line chips, which would open up market opportunities for chipmakers offering less powerful, but also less costly, alternatives, Keh added.
When that happens, “Nvidia’s dominant market share position will be tested,” Keh said.
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