Malena Sloss/Bloomberg/Getty Images
Nvidia Grace CPU superchip, bottom, and Grace-Grace module located at headquarters in Santa Clara, California, USA, Monday, June 5, 2023.
new york
CNN
—
Last year was a breakthrough year for artificial intelligence, and no company benefited from this trend more than chipmaker Nvidia.
NVIDIA’s profits rose to nearly $12.3 billion in the three months ended Jan. 28, according to financial results released Wednesday. That’s up from $1.4 billion in the same period a year earlier and was up 769% year-over-year, an even stronger growth than Wall Street analysts had expected. Be expected. As a result, the company’s full-year profit increased by more than 580% compared to the previous year.
Nvidia also posted a 265% year-over-year revenue increase in the fourth quarter, also beating analyst expectations, as it continues to ride the wave of large-scale AI investments.
“Demand is surging across companies, industries and countries around the world,” CEO Jensen Huang said in a statement Wednesday. In a call with analysts after the report, Huang likened the widespread adoption of AI technology to the beginning of a new industrial revolution.
Nvidia is critical to the burgeoning AI field. The American chipmaker is unparalleled in producing processors that power artificial intelligence systems, including generative AI, a hot new technology that can create text, images, and other media.
Nvidia accounts for about 70% of AI semiconductor sales, even though Meta, Amazon, IBM and Microsoft have begun producing some of their own chips, said Dan Morgan, vice president of Synovus Trust Company. It is said that there is
Thanks to partnerships with infrastructure giants like Google, Amazon and Cisco, the company’s core data center business hit a record $18.4 billion in revenue in the fourth quarter, up 409% year-over-year.
However, the company’s stock price has soared over the past year, with the stock growing by about 230% in 2023. This means that NVIDIA is now very important to the broader market as well. Analysts at Goldman Sachs called Nvidia “the most important stock on the planet” in a note Tuesday. Nvidia was the best performing stock in the S&P 500 in 2023.
Nvidia’s stock price rose nearly 7% in after-hours trading following Wednesday’s report.
But some shareholders are concerned that the strong growth won’t continue forever. Additionally, restrictions on exports of advanced AI chips to China introduced by the United States last year could affect products such as Nvidia’s H800 and A800 chips, blocking access to a huge and fast-growing market.
The company acknowledged that data center sales in China were “significantly lower” in the January quarter due to restrictions, but said other regions still contributed to the division’s strong growth.
“However, if Nvidia does not find a long-term workaround to this restriction, it could start to trickle down to future growth,” Morgan said in an emailed comment ahead of Wednesday’s report. .
Nvidia executives said on an earnings call that the company has already begun shipping alternative chips to China that do not violate regulations. CFO Colette Kress said China’s share of the company’s overall data center business was in the mid-single digits in the fourth quarter and is expected to remain in a similar range this quarter.
Despite China’s concerns, others on Wall Street believe the company still has plenty of room to run.
“While the race for AI chips from Intel, AMD, Meta and Microsoft could be months away, demand for NVIDIA chips will only continue to grow,” Gajo Sevilla, senior analyst at Insider Intelligence, said in a note earlier this week. Therefore, the outlook for NVIDIA is bright.”
Kress said on a conference call Wednesday that demand for the company’s advanced AI chips “outpaces supply” at this time. “Building and deploying AI solutions is permeating nearly every industry.”
Ensuring supply can meet surging demand could be a challenge for the company heading into this year. But the company’s “cycle times are improving and overall supply is increasing very well,” Huang said.
The company said Wednesday that it expects revenue for the current quarter to be about $24 billion. This is a 233% increase from the same period last year and exceeded Wall Street expectations.
