Chip giant Nvidia rides AI wave as profits soar
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Signaling that the boom in AI is still going strong, Nvidia said revenue in the current quarter would ramp up further to $16 billion.
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A Nvidia office building is shown in Santa Clara, Calif., on Wednesday, May 31, 2023. (AP)
US chip giant Nvidia, a key player in artificial intelligence systems, exceeded expectations on Wednesday as the post-ChatGPT AI excitement continues to drive the tech sector.
The Silicon Valley-based company reported that its sales doubled year-on-year to $13.5 billion in the latest completed quarter, resulting in a net profit of $6.2 billion – a remarkable 843% increase from the previous year.
Highlighting the ongoing AI boom, Nvidia projected that its revenue for the current quarter would further escalate to $16 billion.
Nvidia's CEO Jensen Huang declared "A new computing era has begun" after the outstanding earnings report. He emphasized the influence of accelerated computing and generative AI on reshaping the computer industry landscape.
The company's stock surged over 8% following the results, contributing to its year-to-date share price tripling.
Nvidia's pivotal role in AI technology positions it as a measure of the generative AI frenzy catalyzed by the release of ChatGPT last year. It previously impressed Wall Street with remarkable earnings, propelling it into the trillion-dollar company club, a status shared by only a few giants.
"The entire tech sector and overall market was waiting for Nvidia with this being the purest and best barometer for AI demand," noted Dan Ives of Wedbush Securities.
Huang urged companies to shift their spending from traditional computing to embracing AI, highlighting the new productivity and service possibilities AI offers.
Nvidia specializes in manufacturing graphics processing units (GPUs), critical chips for building generative AI technologies like ChatGPT, image, facial, and speech recognition. The company also provides AI-focused computers and services, offering a comprehensive AI solution.
Originally designed for gaming graphics, Nvidia's GPUs cost tens of thousands of dollars each, and the demand for AI applications has led to supply shortages.
Nvidia's strategic role in AI has led to export restrictions by the US government on its highest-performing chips, impacting its access to the Chinese market. Concerns also arise about the supply chain as Nvidia designs but does not manufacture its chips, leaving it vulnerable to disruptions.
