Nvidia shares surge 21% as sales forecast jumps and AI booms
NVIDIA on Wednesday (May 24) forecast second-quarter revenue more than 50 per cent above Wall Street estimates, with the company saying it is boosting supply to meet surging demand for its artificial intelligence (AI) chips, which are used to power ChatGPT and many similar services.
Shares of Nvidia, the world’s most valuable listed semiconductor company, jumped as much as 21 per cent to a record-high US$370 in extended trade. Nvidia’s surge after the bell increased its stock market value by nearly US$150 billion to more than US$900 billion, extending the Silicon Valley company’s lead as the world’s most valuable semiconductor firm.
The artificial intelligence boom has helped Nvidia become the fifth-most valuable US company by market value.
Nvidia has strained to meet the demand for its AI chips, with Tesla chief executive officer Elon Musk, who is reportedly building out an artificial intelligence startup, earlier this week telling an interviewer that the graphics processing units (GPUs) are “considerably harder to get than drugs”.
But Nvidia chief executive officer Jensen Huang on Wednesday said in a statement that the company is “significantly increasing our supply to meet surging demand” for its data centre chips.
Analysts believe Nvidia reallocated some supply-chain capacity away from the slumping PC gaming market to its data centre AI chips. Its PC gaming chips sell for as much as US$1,500 while its AI chips fetch more than ten times that at about US$20,000 each.
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Nvidia forecast current-quarter revenue of US$11 billion, plus or minus 2 per cent. Analysts polled by Refinitiv are expecting revenue of US$7.15 billion.
Adjusted revenue for the quarter ended Apr 30 was US$7.19 billion. Analysts polled by Refinitiv were expecting revenue of US$6.52 billion. The company’s data centre chip sales hit US$4.28 billion, beating analyst estimates of US$3.89 billion, according to segment data from FactSet.
Gaming chip revenue beat Wall Street expectations at US$2.24 billion versus estimates of US$1.97 billion, according to FactSet data.
Net income rose to US$2.04 billion, or 82 US cents per share, from US$1.62 billion, or 64 US cents per share, a year earlier. Excluding items, the company earned US$1.09 per share in the first quarter, beating estimates of 92 US cents. REUTERS
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