Nvidia released unexpectedly strong revenue forecasts and dismissed claims of a bubble in the artificial intelligence industry, easing concerns that had spread across the entire technology sector.
The world’s most valuable company is expected to report sales of approximately $65 billion for the January quarter, about $3 billion higher than analysts’ forecasts. Nvidia also said it is on track to achieve a revenue growth of $500 billion over the next few quarters, and the actual figure could be even larger than expected.
This outlook report indicates that the market demand for Nvidia’s artificial intelligence accelerators remains strong. These expensive and powerful chips are used for developing artificial intelligence models. In recent weeks, Nvidia has been facing growing concerns about whether the surge in spending on such devices is sustainable.
“There are many claims about an AI bubble,” CEO Huang Rengxun said during a conference call with analysts, “but from our perspective, the situation is quite different.”
Optimistic comments pushed the stock price up by about 5% in late trading. By the close of trading, the company’s stock price had risen by 39% this year, with a market value reaching $4.5 trillion.
Nvidia’s performance has become a barometer of the health of the artificial intelligence industry, and its news has boosted the prices of many related stocks. CoreWeave Inc., a provider of artificial intelligence computing services, rose by more than 9% in after-hours trading, and the share price of its peer Nebius Group NV also increased by more than 8%.
Brian Moynihan, senior client portfolio manager at Zacks Investment Management, said in a report: “The market has responded very positively to the news that the momentum of artificial intelligence development remains strong.” The company holds shares of Nvidia. He added: “The demand for Nvidia’s hardware solutions remains strong.”
Nvidia’s CEO said last month that the company’s revenue would exceed 50 billion US dollars in the coming quarters. He also said that the owners of large data centers would continue to invest in new equipment because the investment in artificial intelligence has begun to pay off.
Chief Financial Officer Colette Kress further stated on Wednesday that Nvidia’s revenue is likely to exceed the target of $50 billion.
She said in the teleconference, “We definitely have the opportunity to add some more on top of the announced $500 billion. This figure will still grow.”
Huang Renxun said that the increasingly important role of artificial intelligence will help maintain demand for Nvidia’s products. This technology is already helping to accelerate existing computing tasks, such as search. Moreover, it is about to be applied to the real world in the form of robots and other devices.
Nvidia’s third-quarter results also exceeded analysts’ expectations. For the quarter ending October 26, revenue rose 62% to $57 billion, and earnings per share were $1.30. Analysts had previously forecast revenue of $55.2 billion and earnings per share of $1.26.
Nvidia’s main data center division generated $5.12 billion in revenue this quarter, higher than the average forecast of $4.93 billion. The sales of gaming PC chips, which used to be the company’s main source of income, were $4.3 billion, roughly in line with the average forecast of $4.4 billion.
The latest quarterly forecast reflects the company’s astonishing growth momentum. Sales are expected to increase more than tenfold compared to the same period three years ago. Nvidia is on track to achieve an annual net profit that exceeds the sales of its two long-term rivals, Intel and AMD.
However, Nvidia’s expansion path has not been smooth sailing. The US restrictions on exporting advanced chips to China have largely excluded Nvidia from this huge market.
Huang Renshun had lobbied Washington to overturn these regulations, arguing that they were contrary to the national security interests they were intended to safeguard. But even after some of the strictest regulations were relaxed, Nvidia still does not expect to achieve any sales of artificial intelligence accelerators in the Chinese market at present.
In an interview with Bloomberg Television, Huang said, “Our forecast for the Chinese market is zero. We very much hope to have the opportunity to re-enter the Chinese market with excellent products.”
Some investors are also concerned about the huge transaction structures that Nvidia has reached with its clients. These deals involve investments in startups like OpenAI and Anthropic PBC, raising questions about whether these agreements artificially inflate the demand for computers.
Earlier this week, Nvidia and its client Microsoft announced that they would invest up to 15 billion US dollars in Anthropic. The startup also promised to purchase 30 billion US dollars worth of computing power from Microsoft’s Azure cloud service and will collaborate with Nvidia’s engineers to fine-tune chips and artificial intelligence models.
During the conference call, Huang Rengxun was asked about the deals with OpenAI and Anthropic. He said that Nvidia’s investment in OpenAI (which has not yet been finalized) would bring rich returns. He also said that investing in Anthropic would help establish a connection with a company that was not a major user of Nvidia’s technology before.
Some rivals of Nvidia are increasingly optimistic that they can eventually challenge the company’s dominance in the field of AI accelerators. At the beginning of this month, AMD predicted that its AI chip business would accelerate its growth and vigorously promoted the prospects of its upcoming products.
AMD, Broadcom and Qualcomm have all announced partnerships with major users of Nvidia chips. Data center operators are also increasingly inclined to adopt self-developed design solutions – a move aimed at reducing their reliance on Nvidia’s chip supply.
On Wednesday, Huang Renshun said that competitive pressure remains low. He said that more customers than ever choose NVIDIA after trying other products. Huang Renshun also said that the complexity of artificial intelligence computer systems puts NVIDIA in a favorable position.
This CEO is also actively promoting the application of artificial intelligence in the global economy. He has embarked on a global tour, striving to persuade government agencies and enterprises to deploy his technology.
NVIDIA was founded in 1993 and is a pioneer in the graphics chip market. Its products are used to create realistic images for computer games. AMD is its only major competitor in this field.
Nvidia has established its dominance in the field of artificial intelligence by adjusting its chip architecture to handle massive amounts of data, helping researchers create software that can match or even approach human capabilities.
The company, headquartered in Santa Clara, California, still holds more than 90% of the market share in the artificial intelligence acceleration chip market. To consolidate its market advantage, the company has also added other products, including networking, software and other services.
Huang said in an interview, “The company’s business is very strong. We have made full preparations for the strong growth this year.”
