Nvidia recently released its financial results for the first quarter of the fiscal year 2024, which showed how the firm is prospering in the middle of the Artificial Intelligence (AI) industry boom owing to the rising need for potent technology to enable the AI revolution.
Increasing Demand and Stunning Prices
Nvidia stated in a press statement reporting its earnings that it had witnessed a 19% rise in sales from the prior quarter as well as a 44% increase in profitability. Despite a 13% fall in revenue from the prior year, lower expenses resulted in a 26% rise in net income.
The business also disclosed that it anticipated $11 billion in revenues this quarter with a 2% margin, which is more than 50% of what Wall Street had predicted.
As a result of the strong financial results, Nvidia saw a 28% increase in its stock price during after-hours trading. The company’s earnings significantly outperformed expectations on the day the announcement was made, which was the biggest increase for the company as well as the US stock market.
The company’s remarkable success improved not just the value of its own shares but also that of other AI-related companies including C3.ai and Palantir Technologies, a competitor chipmaker Advanced Micro Devices, Microsoft, and Google, proponents of generative AI, and others.
If the gains continue, the business would surpass Apple’s previous record of $191 billion by growing its market value from $755 billion to $219 billion in a single day.
Jensen Huang, the CEO and founder of the business, claimed in the statement that there was « surging demand » for the company’s data centre products, such as GPU chips from cloud service providers and sizable consumer internet companies, which use Nvidia chips to train and deploy generative AI applications.
“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” he said, adding that “A trillion dollars of installed global data center infrastructure will transition from general-purpose to accelerated computing as companies race to apply generative AI into every product, service, and business process.”
From CPUs to GPUs
The effectiveness of Nvidia’s data centre demonstrates how cloud providers and other companies that operate many servers, like bitcoin miners, are beginning to place an increasing amount of value on the capability of AI chips.
According to Ethan Vera, chief operating officer at mining services provider Luxor Technologies, “the overwhelmingly positive market reaction” to Nvidia’s news “will incentivize more mining companies to follow suit making announcements of their own and allocating more of their power capacity to other forms of compute”.
But he acknowledged that because of the different infrastructure designs, repurposing AI devices for bitcoin mining would not be simple. He said “Firms will have to hire engineers to plan their sites differently and sales staff to sign up clients”
Nvidia, in the opinion of Huang, is riding a significant shift in the way computers are constructed, which might result in even more growth and push the market for data centre components to $1 trillion, he said.
Since computers’ creation, the CPU, whose primary manufacturers were Intel and AMD, has been the most crucial part. Nvidia has, however, risen to the top along with GPUs as a result of the growth of AI and their tremendous computational capacity.
The most crucial question is whether Nvidia’s stock prices will continue to rise, making it the most valuable chipmaker in the world.
Only Apple, Saudi Aramco, Microsoft, Alphabet, and Amazon are presently members of the elite trillion-dollar club; with an additional $50 billion, Nvidia would join it. After joining the elite club in 2021, Tesla and Meta have since left it.
