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Record sales of artificial intelligence chips boosted Nvidia’s revenue by 262 percent last quarter, beating lofty expectations, and its CEO said its market growth will continue this year with the launch of a new line of chips.
Jensen Huang told investors the company will see “huge” revenue from its new Blackwell chips this year as it capitalizes on exploding demand for the computing power behind generative AI.
Blackwell will contribute to a new phase of the company’s growth, Huang said, adding that Nvidia will continue to introduce newer, more powerful chips at the same pace. “There’s another chip after Blackwell and we’re in a one-year rhythm,” he said.
Demand for Nvidia’s AI data center GPUs has skyrocketed in the past year as the biggest tech companies rush to develop the computing infrastructure needed to deliver powerful new AI products at scale. Google, Microsoft, Meta and Amazon said their spending will remain high in 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 sought-after AI chips, rose 427 percent year over year to $22.6 billion in the quarter, driven by strong demand for Nvidia’s current-generation Hopper GPUs, Nvidia CFO Colette Kress told investors. Shipments of the Blackwell chip are expected to begin this quarter.
Shares of Nvidia, which have extended their meteoric rise of more than 90 percent since the start of the year, gained about 6 percent in after-hours trading. The chipmaker also announced a 10-for-1 stock split effective June 7 and said it was increasing its quarterly cash dividend by 150 percent.
Ahead of the results announcement, traders were bracing for big swings in Nvidia shares and the broader markets. The massive rise in the stock 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 parent Alphabet and Amazon to become the third most valuable company listed in the US.
Nvidia is moving quickly to take advantage of the surge in AI demand and stay ahead of competitors and customers who are 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 artificial intelligence models and offer five times the power at “inference” — the speed at which such models can respond to queries. This came just a year after the company unveiled its previous generation GPU chip architecture, the Hopper. The Blackwell should start shipping later this year.
Analysts have questioned whether the move to a new product line could affect the massive year-over-year growth Nvidia has seen in previous quarters as a temporary “air pocket” of demand emerges. The rapid pace of releasing its chips, for example, led Amazon to change plans to order chips based on the latest generation of Nvidia architecture and replace them with the Blackwell line.
But Huang assured investors that demand for both the Hopper and Blackwell lines is “well ahead of supply”, a situation that is likely to continue “well 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 introducing data center AI chips to compete with Nvidia, and have also joined forces with Nvidia clients to offer alternatives to its Cuda software platform, cementing its dominant position as a chip supplier.
In April, Intel and AMD reported lackluster first-quarter results and modest guidance, suggesting they are yet to take advantage of the demand explosion. On Tuesday, Microsoft announced that it will use AMD’s new MI300X accelerator chips and its ROCm software to run some of the most demanding AI tasks in the Azure cloud service.
“Nvidia has beaten the data center [revenue] and beat across all borders,” said Daniel Newman, CEO of The Futurum Group. “The whole market was waiting for this number and Nvidia delivered.”
A stock split would create “greater availability” and “further momentum for the stock,” he added. “The AI business is alive and well.