Nvidia has announced stronger-than-anticipated quarterly earnings for the initial three quarters of 2023, surpassing analyst predictions by 10-20 percent. The company anticipates a 233 percent growth in first-quarter revenue, outpacing Wall Street’s projected growth of 208 percent.
Nvidia, a key player in artificial intelligence (AI) chip manufacturing, has forecasted a substantial threefold rise in quarterly revenue. This exceeded market expectations, leading to a 10 percent surge in its shares during after-hours trading, according to a report by Reuters.
The strong demand for Nvidia’s data center chips and graphics processing units (GPUs) is on the upswing as companies seek to enhance their AI capabilities. Nvidia’s silicon remains a frontrunner in the global AI chip market, with Microsoft standing out as one of its prominent clients.
Nvidia has surpassed analyst expectations with better-than-anticipated quarterly revenue in the initial three quarters of 2023, outperforming estimates by 10-20 percent. The company projects a remarkable 233 percent growth in first-quarter revenue, surpassing Wall Street’s predicted 208 percent expansion.
The late-day surge in Nvidia’s stock has propelled the company’s market capitalization by more than $129 billion. This upward momentum has also influenced other AI-related firms, such as Arm Holdings, leading to a collective uptick of $160 billion in stock market value.
While Nvidia’s financial outlook appears positive, there are analysts who express concerns about the sustainability of its rapid growth, as indicated in the report.
The company foresees first-quarter revenue of $24.0 billion, with a margin of plus or minus 2 percent, surpassing the average analyst expectation of $22.17 billion.
In the fiscal fourth quarter, sales in Nvidia’s data centre segment, the largest by revenue share, experienced an impressive surge of 409 percent to reach $18.4 billion, surpassing estimates according to LSEG data. Despite this success, there are lingering concerns about the company’s capacity to meet the surging demand for its chips in the short term.
Nvidia’s strained supply chains, grappling with high demand, are showing signs of improvement. Analysts informed Reuters that they anticipate Taiwan Semiconductor Manufacturing Co’s (TSMC) increased packaging capacity to alleviate supply constraints in the first half of the year.
Despite encountering tightened trade restrictions, Nvidia’s revenue has demonstrated continued growth. The company recently revealed undergoing antitrust inquiries from regulatory bodies in France, the European Union, the United Kingdom, and China, specifically concerning GPU sales and supply allocation.
In December, United States Commerce Secretary Gina Raimondo disclosed ongoing discussions between the Biden administration and Nvidia regarding permissible sales of AI chips to China. Nvidia’s CEO, Jensen Huang, affirmed a commitment to adhering to the established rules of the Commerce Department.
The AI chip-making company, with a robust sales forecast, has reignited the AI fervor that fueled last year’s stock-market rally, according to a Bloomberg report. Nvidia’s surge in shares has become a driving force in the market.
The positive momentum extended to index futures, with Nasdaq 100 futures surging over 1 percent. Competitors, including Advanced Micro Devices Inc. and Intel Corp., also experienced gains during this period, as reported.
Global peers and suppliers also experienced rallies. SK Hynix Inc., a key memory chip supplier to Nvidia, saw a 4.7 percent rise in early trading in Seoul, while Japanese chip-tester maker Advantest Corp. surged by 6.3 percent.
According to Kim Forrest, Chief Investment Officer at Bokeh Capital Partners LLC, “Nvidia has been the market driver for the past 11 months. As goes Nvidia, so goes the market. The results confirm the narrative that AI will remain strong,” as reported by Bloomberg.
In 2024, Nvidia’s stock has already jumped over 30 percent, putting it in competition with Amazon and Alphabet for a spot among the most valuable companies.
Thomas Martin, Senior Portfolio Manager at Globalt Investments, stated that with this revenue beat and raised guidance, Nvidia will continue to grow and lead in AI. The strong demand for its products solidifies its position in the market.
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