Artificial intelligence chipmaker Nvidia on Wednesday announced another impressive quarter of growth as investors try to decipher whether the latest fads in technology are wild exaggerations or the start of a new era of prosperity and productivity.
Results for the November-January period far exceeded the expectations of analysts who shape investor perception, as they have since Nvidia’s high-end chips emerged as the best building blocks for AI three years ago.
Nvidia’s fourth-quarter fiscal revenue rose 73% year-over-year to $68.1 billion, and its profit nearly doubled to about $43 billion, or $1.76 per share.
“We’ve never had a quarter as strong as this one,” said Jake Behan, head of capital markets at investment firm Direxion. “The AI industry needed some positive news, and Nvidia’s earnings report provided plenty of it.”
The Santa Clara, Calif., company also beat analysts’ expectations, but CEO Jensen Huang stressed that demand for its chips remains “soaring.” This explanation is reflected in Huang’s theory that the AI boom is still in the early stages of building a way to reshape society. If Nvidia meets its revenue target for the February-April period, it would represent a 77% year-over-year increase. This represents an acceleration of the company’s already impressive growth rate.
“AI is here, but AI is not coming back,” Huang said on a conference call with analysts. “AI will continue to evolve.”
Despite the impressive performance and still-rosy outlook, it’s clear that many investors are still worried about an ominous recession after three years of boom that saw Nvidia’s market value soar from $400 billion at the end of 2022 to nearly $4.8 trillion today. Nvidia’s stock price initially rose 4% in after-hours trading after the release of the latest quarterly data, but rebounded after Huang’s upbeat conference call and fell slightly.
While Nvidia has regularly passed the standards set by analysts over the past three years, often by wide margins, it hasn’t always been enough to satisfy investors who have grown skeptical about whether AI justifies the trillions of dollars they’re spending on developing the technology.
After Nvidia delivered impressive results that far exceeded analysts’ expectations. In the last quarterly reportthe stock still fell 3% in next day trading.
AI fever reignited last month as the four leading companies in the field (Amazon, Microsoft, Google parent Alphabet, and Facebook parent Metaplatforms) collectively pledged to spend about $650 billion this year on increasing AI computing power.
As Nvidia’s annual revenue has soared from $27 billion to $216 billion, much of the money is expected to go towards buying the Nvidia chips needed to power the AI factory, as has been the case for most of the past three years. Analysts expect the company’s sales to exceed $330 billion next year, an increase of more than 50% from the previous year.
“We want to take advantage of this great opportunity at the beginning of this new computing era, the beginning of a transition to a new computing platform, and move everyone to Nvidia,” said Huang.
