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Nvidia’s AI chip demand boosts

SANTA CLARA, CALIFORNIA (AP) — Nvidia Corp, which has seen its value skyrocket over the past year thanks to soaring demand for its graphics chips used for artificial intelligence, posted stronger-than-expected results Wednesday for its latest quarter, with its revenue more than tripling from a year earlier.

Nvidia reported revenue for its fiscal fourth quarter that ended January 28 of USD22.1 billion, up from USD6.05 billion.

The company based in Santa Clara, California, earned USD12.29 billion, compared to a profit of USD1.41 billion a year ago.

Adjusted for one-time items, Nvidia earned USD5.16 a share in the latest quarter, which topped Wall Street forecasts for USD4.59 per share, based on analysts surveyed by FactSet Research. Analysts had expected revenue of USD20.4 billion for the period that concluded the company’s fiscal year.

The company’s specialised chips are key components that help power different forms of artificial intelligence, including the latest generative AI chatbots such as ChatGPT and Google’s Gemini.

“Accelerated computing and generative AI have hit the tipping point,” said Jensen Huang, founder and CEO of Nvidia, in a statement. “Demand is surging worldwide across companies, industries and nations.”

Nvidia carved out an early lead in the hardware and software needed to tailor its technology to AI applications, partly because Huang began to nudge the company into what was then seen as a still half-baked technology more than a decade ago. It also makes chips for gaming and cars.

Huang looked 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.

“Another blockbuster quarter from Nvidia raises the question of how long its soaring performance will last,” said Insider Intelligence analyst Jacob Bourne. “It has a massive lead in the growing global AI chip sector but can’t rest on its laurels.”

Bourne said Nvidia faces a number of challenges, including broader economic uncertainty, tech giants’ drive to make their own AI chips and emerging rivals. But he said the company’s market strength, for the near future, is “durable”

For the current quarter, Nvidia expects revenue of about USD24 billion. Analysts are currently expecting Nvidia to post revenue of USD22.2 billion for the February-April period. The company expects “continued growth” to 2025 and beyond.

The company said its data centre revenue grew in all regions except China, where the US government has imposed export regulations.

“Although we have not received licences from the US government to ship restricted products to China, we have started shipping alternatives that don’t require a licence for the China market,” Huang said in a conference call with analysts.

Nvidia relies heavily on the world’s biggest maker of computer chips, the Taiwan Semiconductor Manufacturing Company, to churn out the chips that Nvidia designs.

Taiwan’s Taiex benchmark index last week jumped three per cent to a record high, buoyed by a surge in TSMC’s share price.

The leap came after Morgan Stanley analysts raised their price target on Nvidia’s stock to USD750 from USD603, citing an increase in demand for AI chips.

“Generative AI has kicked off a whole new investment cycle to build the next USD1 trillion of infrastructure of AI generation factories,” Huang said. “We believe these two trends will drive a doubling of the world’s data centre infrastructure installed base in the next five years and will represent an annual market opportunity in the hundreds of billions.”

Nvidia’s shares jumped 7.5 per cent, to USD726 in after-hours trading.

FILE – A Nvidia office building is shown in Santa Clara, Calif., May 31, 2023. PHOTO: AP