The technology giant Nvidia has provided a forecast that far exceeds earlier predictions, causing a 26% surge in late trading. The company anticipates sales of $11 billion in the current quarter, which is double the analysts’ predictions. Even the company’s previous quarterly reports have beaten the forecasts.
Nvidia, a major chip manufacturer, saw its stock jump by 26% in late trading in New York. This was due to positive reports and a particularly optimistic forecast. The company’s net profit stood at $1.09 per share, compared to expectations of a profit of 92 cents per share. The company’s revenues totaled $7.19 billion, compared to a revenue forecast of $6.52 billion.
The company stated that it expects sales of about $11 billion – with a 2% deviation range in the current quarter – 50% higher than Wall Street estimates of $7.15 billion. Even before the jump recorded in the hours after trading, Nvidia’s stock had risen by 109% so far in 2023, driven primarily by optimism stemming from the company’s leading position in the artificial intelligence (AI) chip market. Nvidia’s CEO, Jensen Huang, said the company is seeing “tremendous demand” for its data center products.
Nvidia’s data center division reported sales of $4.82 billion, compared to a forecast of $3.9 billion – a 14% annual growth. The company said its performance was driven by increased demand for its GPU chips, from cloud technology providers and large internet companies, which use Nvidia’s chips to train and implement generative AI technology, like OpenAI’s ChatGPT.
However, Nvidia’s gaming division, which includes its graphics cards unit for personal computers, reported a 38% drop in revenues, to $2.24 billion, compared to a forecast of $1.98 billion. According to Nvidia, the reason is the slowdown in the macroeconomic environment, as well as the thickening of its GPU chip manufacturing unit for gaming.
The high demand for AI investments has made Nvidia’s stock the best performer so far this year in the S&P 500 index. According to Bloomberg’s Billionaires Index published a week ago, the fortune of Nvidia’s CEO Jensen Huang has risen this year by 98% to $27.3 billion, making him the highest-earning American billionaire in the period. Ranked second in terms of percentage increase in capital this year is Mark Zuckerberg, who enjoyed a 94% increase in his fortune to $88.7 billion, following Meta’s recovery in sales in the first quarter.
Investors are catching Nvidia as a central supplier that will feed the need for the computing power necessary for artificial intelligence. The high demand for AI chips helped offset a 20% drop in Nvidia’s sales in China in the last fiscal year, after the US government banned it from selling advanced chips in the country.