Nvidia sales forecast gets boost as artificial intelligence chips pay off and it readies a new cloud service
- Sales in the three months ending in April will be about US$6.5 billion, the company said, lifting its share price
- Under CEO Jensen Huang, the company has parlayed its dominance of graphics processors into a strong position in the growing market for AI hardware
Nvidia Corp jumped in late trading after giving a bullish revenue outlook for the current quarter, suggesting that a push into artificial intelligence (AI) processors is helping offset sluggish demand for personal computer chips.
Sales in the three months ending in April will be about US$6.5 billion, the company said in a statement on Wednesday. That compares with an average of analysts’ estimates of US$6.35 billion, according to data complied by Bloomberg.
The forecast signals that Nvidia’s push into AI computing chips is paying off. Under co-founder and chief executive Jensen Huang, the company has parlayed its dominance of graphics processors into a strong position in the growing market for AI hardware. Its chips excel at the kind of parallel processing that allows computers to make sense of large amounts of data and train software to make decisions.
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The interest in ChatGPT has opened the eyes of business leaders to the power of artificial intelligence, Huang said in an interview. But right now, it’s mostly general-purpose software. The value will come from tailoring it to companies’ own needs so they can improve their services and products, he said.
“It’s a wake-up moment for the capabilities of AI,” he said. “The challenge is there is no such thing as one AI model for everyone. This is really where we can be of great value for the industry.”
The shares climbed as much as 9.1 per cent after the report was released. They had earlier closed at US$207.54 in New York.
The shares have already been the best performer in the Philadelphia Stock Exchange Semiconductor Index this year, gaining 42 per cent. Investors have piled into Nvidia – making it the world’s most valuable chip maker again – as they bet that demand for AI systems such as ChatGPT will boost orders for the Santa Clara, California-based company’s products.
Nvidia’s dependence on the personal computer market for a large chunk of sales still dragged on its results last quarter, though not as much as feared. Computer makers have been slashing chip orders in an attempt to work through stockpiles of unused inventory.
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The company’s gaming business – heavily reliant on the PC industry – had revenue of US$1.83 billion last quarter, a decline of 46 per cent. Still, it topped the average estimate of US$1.6 billion.
Data-centre sales grew 11 per cent to US$3.62 billion, coming in short of an average prediction of US$3.86 billion.
Overall revenue fell 21 per cent to US$6.05 billion, marking Nvidia’s second decline in 13 quarters. Profit was 88 cents a share, minus certain items. On that basis, analysts had predicted a profit of 81 cents on sales of about US$6 billion.
