The revenue and upcoming sales of chip giant Nvidia have exceeded Wall Street's expectations, easing investors' concerns about market turbulence caused by massive spending in the field of artificial intelligence (AI).
The company's quarterly financial report released on Wednesday showed that revenue surged 62% to $57 billion in the three months ending in October, mainly due to the increasing demand for its chips in artificial intelligence data centers. The sales of this department increased by 66%, exceeding $51 billion. Reaching $51.2 billion, easily exceeding analysts' previous expectations of $49.09 billion, a 25% increase from the previous quarter and a 66% increase from the same period last year. The remaining $6.8 billion in revenue comes from Nvidia's gaming business ($4.2 billion), followed by sales in the professional visualization and automotive sectors.
According to the Generally Accepted Accounting Principles (GAAP) in the United States, the company's net profit was $32 billion, a year-on-year increase of 65%. Both revenue and profit exceeded Wall Street's expectations.
Nvidia stated that most of the growth was driven by initial sales of its GB300 chips. The network business, even components that can work together like a computer with dozens of GPUs, contributed $8.2 billion in sales to data centers.
Nvidia Chief Financial Officer Colette Kress stated in a statement that the company's best-selling chip series is now the Blackwell Ultra, which is the second generation version of the company's Blackwell chips.
In a statement to shareholders, Nvidia Chief Financial Officer Colette Kress pointed out that the accelerated development of computing power, powerful AI models, and the rise of intelligent agent applications have driven the growth of the company's data center business. Kress stated during the company's third quarter earnings conference call that last quarter, the company announced an AI factory and infrastructure project with a total of 5 million GPUs.
Kress said, "This demand covers all markets, including cloud service providers, sovereign states, modern construction enterprises, and supercomputing centers, and includes multiple iconic construction projects
Blackwell Ultra GPU was released in March, offering a variety of configuration options and performing particularly strongly. It has now become the leading product within the company. According to the company, previous versions of the Blackwell architecture have also maintained strong demand.
Nvidia stated that it expects sales for this quarter to be around $65 billion, compared to analysts' previous expectations of $61.66 billion.
The company stated that its net profit for this quarter increased by 65% to $31.91 billion, or $1.30 per share, compared to $19.31 billion, or 78 cents per share, in the same period last year.
Nvidia is the world's most valuable company and is seen as a barometer of the prosperity of artificial intelligence. The performance of this chip manufacturer may affect market sentiment.
CEO Huang Renxun stated in a statement that the sales of his artificial intelligence Blackwell system "far exceeded expectations" and that "cloud GPUs (graphics processing units) are sold out".
Huang Renxun stated in the company's third quarter financial report that "Blackwell's sales far exceeded expectations, and the cloud GPU has also been sold out. The demand for computing continues to accelerate exponentially in terms of training and reasoning. We have entered a virtuous cycle of artificial intelligence. The artificial intelligence ecosystem is rapidly expanding - with more new foundational model builders emerging, more AI startups covering more industries and countries. Artificial intelligence is ubiquitous and capable of anything. ”
"There are many opinions about the artificial intelligence foam. But from our perspective, what we see is quite different," he said in a conference call with analysts. We have performed excellently in all stages of artificial intelligence
He has stated that people's willingness to pay for artificial intelligence tools indicates that the technology is "profitable," even though most tech companies are now reinvesting the money they make in new infrastructure.
Due to growing concerns about overvaluation of artificial intelligence stocks, the quarterly report of this chip manufacturer has attracted more attention on Wall Street than ever before.
Due to concerns about the return on investment in artificial intelligence, the S&P 500 index fell for four consecutive days before Wednesday.
Before Nvidia released its performance, people had high expectations for its performance.
LPL Financial's Chief Technology Strategist Adam Turnquist stated that the question is not whether the company will exceed expectations, but rather how much it will exceed.
Despite artificial intelligence valuation dominating the headlines, Nvidia continues to conduct its business in an elegant manner, "said Matt Blitzman, a senior stock analyst at Hargreaves Lance.
He said that the valuation of certain areas in the field of artificial intelligence "needs to take a breath, but Nvidia does not belong to this category".
Huang Renxun previously stated that he expects artificial intelligence chip orders to reach $500 billion by next year. Investors are paying attention to when the company expects to achieve these revenues and how to fulfill these orders.
Nvidia Chief Financial Officer Colette Kress told analysts that the company "may" take on more orders than the $500 billion already announced. During the earnings conference call, she also creatively listed the highlights of recent financial reports from chip manufacturer partners, emphasizing that artificial intelligence is bringing returns to the company. For example, she mentioned that Meta's artificial intelligence recommendation system allows users to "spend more time on apps like Facebook and Threads"; Anthropic recently announced that it expects its annual revenue to reach $7 billion this year; Salesforce's engineering team has improved efficiency by 30% since using artificial intelligence for coding. She also cited a series of examples of corporate clients.
But she also expressed disappointment with regulatory restrictions that hinder the company from exporting chips to China, saying that the United States "must win the support of every developer, including Chinese developers".
Kress stated on the earnings conference call, "Due to geopolitical issues and increasingly fierce competition in the Chinese market, we were unable to secure large purchase orders this quarter. Although we are disappointed with the current situation that is hindering our ability to export more competitive data center computing products to China, we are committed to continuing to communicate with the governments of the United States and China, and will continue to advocate for enhancing the United States' competitiveness globally
Tech giants are increasing their investment in artificial intelligence, competing to profit from the boom that has driven stock prices to historic highs.
The financial reports released by Meta, Alphabet, and Microsoft last month once again confirmed that these companies have invested huge amounts of money in various aspects from data centers to chips.
Sundar Pichai, CEO of Alphabet, the parent company of Google, also stated that although the growth of AI investment is an "extraordinary moment," there are also some "irrational" factors in the current AI boom. His remarks were made at a time when other industry leaders were issuing warnings.
The chips produced by NVIDIA are crucial for artificial intelligence data centers, as it has entered into a series of deals with key players in the field of artificial intelligence such as OpenAI, Anthropic, and xAI, with NVIDIA being at the core of these deals.
These transactions have attracted much attention due to their cyclical nature, as mutual investments between artificial intelligence companies are increasing. These agreements include Nvidia investing $100 billion in OpenAI (the company behind ChatGPT).
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