Nvidia Forecast Shatters Estimates as AI Boom Remains Strong

(Bloomberg) — Nvidia Corp., the chipmaker at the center of an artificial intelligence boom, released another upbeat sales forecast, showing that spending on AI computing remains strong.

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Second-quarter revenue will be about $28 billion, the company said Wednesday. Analysts predicted, on average, $26.8 billion, according to data compiled by Bloomberg. Results for the fiscal first quarter, which lasted through April, also exceeded projections.

“The next industrial revolution has begun,” CEO Jensen Huang said in a statement, echoing one of his favorite themes. “AI will bring significant productivity gains to nearly every industry and help companies be more cost and energy efficient while expanding revenue opportunities.”

The optimistic outlook reinforces Nvidia’s status as the biggest beneficiary of AI spending. The company’s so-called AI accelerators — chips that help data centers develop chatbots and other cutting-edge tools — have become a hot commodity over the past two years, sending sales soaring. Nvidia’s market valuation also soared, surpassing $2.3 trillion.

Shares rose about 4% in extended trading Wednesday. They had already gained 92% this year at the close, fueled by investor hopes that the company would continue to shatter expectations.

The Santa Clara, California-based company also announced a 10-for-1 stock split and increased its quarterly dividend by 150% to 10 cents per share.

Nvidia, co-founded by Huang in 1993, began as a supplier of graphics cards to computer gamers. Its recognition that the company’s chips were well-suited for developing artificial intelligence software helped it open up a new market — and gave it a leg up on competitors.

The launch of OpenAI’s ChatGPT in 2022 has sparked a race among big tech companies to build their own AI infrastructure. The confusion has made Nvidia’s H100 accelerators a must-have product. They sell for tens of thousands of dollars per chip and are often in short supply.

But much of this new revenue came from a small group of customers. A group of four companies – Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Google, from Alphabet Inc. – are Nvidia’s biggest buyers and account for around 40% of sales. Huang, 61, is trying to broaden his bets by producing computers, software and end-to-end services — with the goal of helping more companies and government agencies deploy their own AI systems.

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In the fiscal first quarter, Nvidia’s revenue more than tripled to $26 billion. Excluding certain items, earnings were $6.12 per share. Analysts had forecast sales of about $24.7 billion and earnings of $5.65 per share.

Nvidia’s data center division – now by far its biggest source of sales – generated $22.6 billion in revenue. Gaming chips provided $2.6 billion. Analysts have set targets of $21 billion for the data center unit and $2.6 billion for gaming.

Nvidia emphasized Wednesday that it wants to sell its technology to a broader market — going beyond the giant cloud computing providers known as hyperscalers. Huang said AI is migrating to consumer Internet companies, automakers and healthcare customers. Countries are also developing their own systems — a trend known as sovereign AI.

These opportunities are “creating multiple multibillion-dollar vertical markets” beyond cloud service providers, he said.

Still, hyperscalers remained a critical driver of growth for Nvidia last quarter. They generated approximately 45% of the company’s data center revenue. This suggests that Nvidia is in the early stages of diversifying its business.

The company’s new chip platform, called Blackwell, is now in full production, Huang said. And it lays the foundation for generative AI that can handle trillions of parameters. “We are poised for our next wave of growth,” he said.

(Updates with more information from the report in the final four paragraphs.)

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