SAN FRANCISCO (AP) – Computer chip maker Nvidia has rocketed into the constellation of Big Tech’s brightest stars while riding the artificial intelligence (AI) craze that’s fueling red-hot demand for its technology.
The latest evidence of Nvidia’s ascendance emerged with Wednesday’s release of the company’s quarterly earnings report. The results covering the May-July period exceeded Nvidia’s projections for astronomical sales growth propelled by the company’s specialised chips – key components that help power different forms of AI, such as Open AI’s popular ChatGPT and Google’s Bard chatbots.
“This is a new computing platform, if you will, a new computing transition that is happening,” Nvidia Chief Executive Officer Jensen Huang said on Wednesday during a conference call with analysts.
Nvidia’s revenue for its fiscal second quarter doubled from the same time last year to USD13.51 billion, culminating in a profit of USD6.2 billion, or USD2.48 per share, more than nine times more than the company made a year ago. Both figures were well above the projections of analysts polled by FactSet Research.
And the momentum is still building. The Santa Clara, California, company predicted its revenue for its August-October quarter will total USD16 billion, nearly tripling its sales from the same time last year. Analysts had been anticipating USD12.6 billion in revenue for that period encompassing Nvidia’s fiscal third quarter, according to FactSet.
Nvidia’s stock price surged six per cent in extended trading after the numbers came out. The shares already have more than tripled so far this year, a run-up that has boosted Nvidia’s market value to USD1.2 trillion – a threshold that thrust the company into the tech industry’s elite.
Other stalwarts that are currently or have been recently valued at USD1 trillion or above are Apple, Microsoft, Amazon and Google’s corporate parent Alphabet.
Now all those tech giants as well as a long line of other firms are snapping up Nvidia chips as they wade deeper into AI – a movement that’s enabling cars to drive by themselves, and automating the creation of stories, art and music.
Nvidia has carved out an early lead in the hardware and software needed in the AI-focused shift, partly because Huang began to nudge the company into what was then seen as a still half-baked technology more than a decade ago. While others were still debating the merits of AI, Huang already was looking at ways that Nvidia chipsets known as graphics processing units might be tweaked for AI-related applications to expand beyond their early inroads in video gaming.
By 2018, Huang was convinced that AI would trigger a tectonic shift in technology similar to Apple’s 2007 introduction of the iPhone igniting a mobile computing revolution. That conclusion led Huang into what resulted in what he calls a “bet-the-company moment”. At the time Huang doubled down on AI, Nvidia’s market value stood at about USD120 billion.
“I think it’s safe to say it was worth it to bet the company” on AI, Huang, 60, said during a presentation earlier this month.
Huang’s foresight gave Nvidia a head start in designing software to complement its chips tailored for AI applications, creating “a moat” that other major chipmakers such as Intel and AMD are having trouble getting around during a period of intense demand that is expected to continue into next year, said Bernstein analyst Stacy Rasgon.
Nvidia is increasingly pitching a Lego-like combination of GPUs, memory chips and more conventional processing chips enclosed in a big package.
