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November 21, 2024
The AI boom continues to boost the business of Nvidia, the leading manufacturer of graphics processors and AI chips. The company recorded an impressive 94 percent jump in revenue in the last quarter, reaching 35.1 billion US dollars compared to the previous year. Profits also more than doubled, reaching 19.3 billion US dollars. Nvidia CEO Jensen Huang spoke of an "age of AI in full swing," triggering a "worldwide movement towards Nvidia products." The demand for Nvidia's high-performance processors, which are essential for complex AI applications, is enormous. Tech giants like Microsoft, Google, Meta, Tesla, and Amazon, as well as emerging AI startups like OpenAI, rely on the company's technology.
The data center technology business developed particularly strongly, increasing by 112 percent year-on-year to 30.8 billion US dollars, exceeding analysts' expectations. This success underscores Nvidia's dominant position in the field of AI hardware. Huang emphasized the transformative power of AI and predicted a comprehensive change in all industries and companies. He sees the world at the beginning of a transformation in which AI-powered programs and robots will fundamentally change the world of work.
Despite this positive development, investors are cautious. The share price fell by 2.5 percent in after-hours trading. The reason for this is the expectations for future development. The forecast for the current quarter, with expected revenue of 37.5 billion US dollars, is in line with market expectations, but some analysts had hoped for even higher figures. Ryan Detrick, Chief Investment Strategist at asset manager Carson, commented on the situation, saying: "Investors had become accustomed to extremely positive surprises. Repeating this, however, is becoming increasingly difficult."
Another factor influencing investor sentiment is the availability of the new "Blackwell" chip generation. Although Nvidia intends to deliver the first systems in the current quarter, demand for "Blackwell" and "Hopper" processors continues to exceed supply. The "Blackwell" processors, which offer significantly higher computing power than their predecessors, faced delays in market launch due to technical problems. There were also reports of potential overheating issues. Nvidia CFO Colette Kress confirmed that demand would continue to exceed supply for several quarters.
Nvidia, once primarily known for graphics cards in the gaming sector, has developed into a central player in the AI sector in recent years. The current AI boom, from which Nvidia has benefited significantly, began with the release of ChatGPT about two years ago. Competitors like AMD and Intel are significantly behind in the field of AI chips. While AMD expects AI chip revenue of around five billion US dollars this year, Nvidia forecasts revenue between 34 and 41 billion US dollars for the current quarter. This large gap illustrates Nvidia's current dominance.
The development of Nvidia's share price reflects the high expectations and the simultaneous uncertainties of the market. The share price has almost tripled since the beginning of the year, but recent price fluctuations show that investors are sensitive to any deviations from the expected growth path. Nvidia's future depends crucially on the further development of the AI market and the company's ability to meet the high demand for its products.
