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Record sales of artificial intelligence chips sent Nvidia’s revenue up 262 percent last quarter, beating high expectations, and its CEO said its successful growth will continue this year with the launch of a new line of chips.
Jensen Huang told investors that the company will generate “a lot” of revenue from its new Blackwell chips this year as it profits from explosive demand for the computing power behind generative artificial intelligence.
Blackwell will contribute to a new phase of the company’s growth, Huang said, adding that Nvidia will continue to release newer, more powerful chips at the same pace. “After Blackwell, there’s another chip, and we’re in a one-year rhythm,” he said.
Demand for Nvidia’s AI data center graphics processing units has surged in the past year as major tech companies rush to develop the computing infrastructure needed to deliver powerful new AI products at scale. Google, Microsoft, Meta and Amazon have indicated that their spending will remain high through 2024.
Revenue for the three months to the end of April was $26 billion, compared with consensus estimates of $24.7 billion. The huge year-over-year increase was similar to the previous quarter, when growth reached 265 percent. For the current quarter, Nvidia expects revenue of about $28 billion, plus or minus 2 percent, compared with consensus estimates of $26.8 billion.
Nvidia’s data center revenue, which relates to its coveted AI chips, rose 427 percent year-over-year in the quarter to $22.6 billion, driven by strong demand for Nvidia’s current generation of Hopper GPUs, Nvidia Chief Financial Officer Colette Kress told investors. . Blackwell chip shipments are expected to begin this quarter.
Shares of Nvidia, which have extended their rapid rise of more than 90 percent since the start of the year, were up about 6 percent in after-hours trading. The chipmaker also announced a 10-for-1 stock split to take effect on June 7 and said it was increasing its quarterly cash dividend by 150 percent.
Ahead of the results, traders were bracing for big changes in Nvidia’s stock and the broader market. The stock’s massive rise has made it one of the most closely watched names on Wall Street. Since the start of 2023, its market capitalization has increased more than sixfold to $2.3 trillion, overtaking Google’s parent company Alphabet and Amazon to become the third most valuable company listed on the US stock market.
Nvidia is moving quickly to take advantage of the surge in AI demand and stay ahead of competitors and customers developing their own AI chips. In March, it unveiled its Blackwell chips, which it says are twice as powerful as the current generation of chips for training AI models and offer five times the performance on “inference” — the speed at which such models can respond to queries. This comes just a year after the company unveiled its previous generation GPU chip architecture, the Hopper. Blackwell is expected to begin shipping later this year.
Analysts have wondered whether the switch to a new product line could affect the huge year-over-year growth Nvidia has seen in previous quarters, as a temporary “air pocket” in demand appears. The rapid pace of chip releases has led Amazon, for example, to change plans to order chips based on the latest generation of Nvidia’s architecture and replace them with the Blackwell line.
But Huang assured investors that demand for both the Hopper and Blackwell lines is “way ahead of supply,” a situation that is likely to continue “into next year.”
Diluted earnings per share were $5.98, up more than 600 percent from a year ago. Gross margin was 78.4 percent, slightly better than the 77 percent analysts had predicted, with net income of $14.9 billion, ahead of expectations of $13.2 billion.
Rivals AMD and Intel are rolling out data center AI chips to compete with Nvidia’s, as well as joining forces with Nvidia’s customers to offer alternatives to its software platform, Cuda, which is cementing its dominance as a chip vendor.
In April, Intel and AMD reported weak first-quarter results and modest guidance, suggesting they have yet to take advantage of the explosion in demand. Microsoft announced Tuesday that it will use AMD’s new MI300X accelerator chips and its ROCm software to run some of the most demanding AI workloads on its Azure cloud service.
“Nvidia has won the data center [revenue] and win across the board,” said Daniel Newman, CEO of The Futurum Group. “The whole market has been waiting for this number and Nvidia has delivered.”
A stock split would create “greater availability” as well as “additional momentum for the stock,” he added. “The AI trade is alive and well.”