On Wednesday, the demand for Nvidia’s processors was highly surpassed by its quarterly revenue prediction. The company also announced it will repurchase $25 billion worth of stock, sending its shares surging after hours. Due to a surplus in demand for Nvidia chips and semiconductors used in artificial intelligence, US chip giant Nvidia has progressed a surplus in sales. The business generated over $16 billion for the third quarter of its current fiscal year, and it expects revenues to increase by 170% in the current quarter compared to the same period last year.
Undoubtedly, Nvidia is progressing well, considering the tighter US export restrictions on AI chips to China. Although the least powerful version is still available for sale, the restrictions stop the business and other US chip manufacturers from shipping high-end graphics processing unit (GPU) chips to China. Colette Kress, Nvidia’s CFO, highlighted the issues and his concerns about the restrictions expected to result in a missed opportunity for the company to chase the race in one of the world’s largest markets. However, she stated “that any potential restrictions would not have an immediate material impact on the company’s financial results due to the strong global demand for their products.”
Jensen Huang, CEO of Nvidia, has collaborated with other influential AI chip makers in a pause to additional export controls. The potential for growing export restrictions on semiconductors and chips to China has dramatically increased the tension between the US and China. Instead of using 40% of all semiconductors produced worldwide, China only produces 12% of its own.
Nvidia’s gaming division used to be the primary source of revenue before the data center division, but with a meager 21.7% yearly growth, it has now started to struggle. PC gamers finally realize that each new generation of Nvidia gaming GPUs is now hardly less value for money.
The company has shown remarkable performance; Nvidia’s shares increased tremendously before the publication of the earnings report. But a day earlier, the company stock relinquished some of these gains as few potential investors cashed in on profits and showed concerns due to the severe consequences of an earnings deficit.
Though it has missed its financial predictions, finally, the company has performed far better than expected. The report shows an impressive $13.5 billion in revenue, which translates to an 88% growth compared to the last quarter and a 101% yearly surge. A whopping $10 billion of the entire income was responsible for Nvidia’s data center business. This surplus led to a staggering 141% sequential increase and 171% yearly growth. The rise can be credited to a high increase in demand from internet and cloud computing companies.
The company’s chief financial officer highlighted the reason responsible for monumental growth in data center revenue and stated that “strong demand for the NVIDIA HGX platform based on our Hopper and Ampere GPU architectures was primarily driven by the development of large language models and generative AI.”
Nvidia’s overall earnings and revenue EPS of $2.70 has increased. The company exceeded expectations by providing a tremendous surge of $16 billion outlook for the ongoing quarter. This amount shows a striking 170% annual growth, taking Nvidia to an entirely new level of revenue.
Additionally, the projection of $16 billion is far better than the $12.61 previously forecasted. The enormous growth was further supported by Nvidia’s accounts receivable expanding twice. This amount was $7 billion in the preceding quarter, whereas it was only $4 billion in the first quarter.