NVIDIA is one of the fastest growing companies in the tech sector, and it’s all thanks to artificial intelligence.
NVIDIA earnings blew away investors as the company published fresh quarterly data after the bell on Wednesday. NVIDIA is the leading player in the chip-making sector.
Market expectations were already high, with revenue forecasts being $11.04 billion and $2.07 in earnings per share. This would have represented a 90% revenue increase and a 328% earnings per share increase since last year.
In reality, NVIDIA revenues came in at $13.51 billion, with $2.70 earnings per share. This represents a staggering growth of 101% and 429% respectively since last year.
On Thursday, NVIDIA shares increased by 9.35%. “A new computing era has begun,” said CEO Jensen Huang.
The company had a tremendous 2023 so far. While most companies are struggling due to high-interest rates, NVIDIA recently breached the $1 trillion evaluation, joining the “Magnificient Seven” of big tech.
Compared to other major technology companies like Apple, Google, and Microsoft; NVIDIA’s quarterly earnings have been overwhelmingly positive with no strings attached.
NVIDIA based its success on remaining on the back end of the most popular tech products at the moment: artificial intelligence.
NVIDIA’s H100 is the fastest AI chip on the market. “During the quarter, major cloud service providers announced massive NVIDIA H100 AI infrastructures,” Huang said, “leading enterprise IT system and software providers announced partnerships to bring NVIDIA AI to every industry. The race is on to adopt generative AI.”
The AI craze
Artificial intelligence became the latest tech craze in November 2022, when ChatGPT was released on the market. OpenAI, ChatGPT’s founder, was later acquired by Microsoft in a $10 billion deal.
As research of generative AI continues, companies demand ever faster and more powerful chips. NVIDIA, being the sector leader, is ready to take on the challenge.
NVIDIA, however, does not control the manufacturing of chips, being mostly relocated to Taiwan. TSMC, Taiwan’s state chip company, is reportedly struggling to satisfy NVIDIA’s increased chip demand.
At the same time, NVIDIA’s efforts to export chips to China are hampered by the US continued trade war with Beijing.
The Biden administration issued a series of export restrictions to China specifically on chip exports. Microchips are crucial elements in the creation of modern military equipment, and the US government needs to stop China’s manufacturing efforts to widen the gap between the two countries.
NVIDIA has long been opposed to restrictions against China. The eastern dragon is NVIDIA’s second-largest market, as well as the fastest-growing.
Halting exports to China will threaten NVIDIA’s growth once the AI craze is over. The company needs to adjust to the new geopolitical realities.
