SAN FRANCISCO: Chip designer Nvidia on Wednesday (Feb 21) forecast a 265% surge in quarterly revenue that handily beat estimates as the company banked on towering demand for its industry-leading artificial intelligence (AI) chips, sending its shares up 10% after-hours.

The late-day jump in the stock of the Santa Clara, California, company lifted its market capitalisation by more than US$80 billion to US$1.75 trillion.

The already-hefty demand for the company’s data center chips and graphics processing units (GPU) continues to grow as firms scramble to expand their AI offerings. Nvidia’s silicon dominates the global market for AI chips, where it counts the likes of Microsoft among its customers.

Nvidia’s forecast beat estimates, but by a smaller amount than it had last year. For the first three quarters of 2023, Nvidia reported quarterly revenue that beat analyst estimates by between 10% and 20%.

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

Nvidia stock has gained more than 30% so far this year as it jockeys with and Alphabet for a spot among the most valuable companies.

As of Feb 20, about US$30 billion worth of Nvidia shares changed hands daily on average over the past 30 sessions, pulling ahead of electric vehicle maker Tesla, which averaged US$22 billion per day over the same period.

The company forecast revenue for the current quarter of US$24 billion, plus or minus 2%. Analysts on average were expecting revenue of US$22.17 billion, according to LSEG data.

Sales at the data centre segment – its largest by revenue share, grew 409% to US$18.4 billion in the fiscal fourth quarter, coming in above estimates of US$16.8 billion, according to LSEG data. Data centre revenue grew close to 280% in the previous quarter.

The AI frontrunner’s supply chains, which have been unable to match the soaring demand for Nvidia’s chips, are also improving.

Analysts expect major supplier Taiwan Semiconductor Manufacturing Co’s (TSMC) advanced packaging capacity to improve in the first half of the year. This will allow Nvidia to work through the central bottleneck to deliver more chips to customers.

The AI poster child's revenue has continued to grow despite tightened restrictions on trade with one of its largest markets: China.

Nvidia reported fourth-quarter revenue of US$22.1 billion, beating estimates of US$20.62 billion. Adjusted for certain items, fourth-quarter earnings were US$5.16 a share, compared with estimates of US$4.64 a share, according to LSEG data.

Nvidia expects its first-quarter adjusted gross margin to be 77%, plus or minus 50 basis points. Analysts on average forecast gross margin of 75.6%.

In a filing, Nvidia said it had received requests from antitrust regulators in France, European Union, United Kingdom and China over its sale of GPU and efforts to allocate supply. The company it expects to receive additional requests from antitrust regulators in the future.

Following Nvidia’s results, server component supplier Super Micro Computer jumped 7.5%. Broadcom and Marvell Technology, two other chipmakers benefiting from the surge in AI computing, rose around 2% each in extended trade. Advanced Micro Devices stock rose 4% and Arm Holdings gained 8%. – Reuters

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