Powered by AI, Nvidia continues its crazy momentum in the first quarter

Powered by AI, Nvidia continues its crazy momentum in the first quarter
Powered by AI, Nvidia continues its crazy momentum in the first quarter

The American chip giant continues to break all records. Nvidia largely exceeded expectations for the first quarter of its staggered fiscal year, confirming the momentum provided by generative artificial intelligence (AI).

In detail, the Santa Clara (California) group generated a net profit of $14.9 billion, more than sevenfold compared to the same period last year (+628%), according to a press release published Wednesday. . Reported per share and excluding exceptional items, a benchmark indicator on Wall Street, the profit came to $6.12, well beyond the $5.65 anticipated by analysts.

Already in the last quarter of 2023, the company had achieved scandalous growth of more than 265% compared to the previous year, with quarterly profits increasing more than eight times. It must be said that Nvidia is benefiting from the explosion in demand for its chips, thanks to which it can achieve more than 70% margins.

In electronic trading after the close on Wall Street, the group’s action gained 7.40%. On the sidelines of the results, Nvidia announced a division by ten of its titles, “ to make the action more accessible to employees and investors “. Trading of the newly issued shares will begin on June 10.

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Several steps ahead

Unknown to the general public until two years ago, Nvidia was catapulted by the emergence of so-called generative artificial intelligence (AI), a large consumer of its chips, the famous graphics cards, to the point of becoming the symbol of this movement. and the third world capitalization on the stock market.

Its rivals, like Intel and AMD, are still struggling to match the power and efficiency of its flagship product, the H100, released in 2022. Apple, Microsoft and Amazon have also developed chips with the AI in mind but they are, for the moment, forced to use Nvidia’s products to be able to keep their promises in terms of artificial intelligence.

This company initially created to improve the graphics of video games therefore remains, for the moment, several steps ahead. During its first financial quarter, which runs from the end of January to the end of April, Nvidia rode its growth in data centers. The latter were already at the origin of the remote computing revolution (cloud computing) and have become even more essential to host the computing capacities necessary for generative AI.

Semiconductors supplied to this sector also accounted for nearly 87% of the group’s turnover, the division having more than quintupled its revenues in one year (+422%).

This leading position has propelled Nvidia’s stock to stock market heights. The Santa Clara group even overtook Amazon in terms of market capitalization, arriving just behind Microsoft and Apple. On February 23, it also crossed the symbolic threshold of 2,000 billion dollars in valuation, an altitude that only Microsoft, Apple and the oil company Saudi Aramco have known. The company can therefore boast of being the only AI company to be among the highest valuations.

Blackwell, Nvidia’s new chip to accelerate the race for artificial intelligence

AI revolution

The next industrial revolution has begun », Commented co-founder and general manager Jensen Huang, quoted in the press release. “ AI will enable productivity gains in almost every industry and help businesses reduce costs and energy consumption “. As it stands, the development of large generative AI models, which make it possible to respond to requests in everyday language like ChatGPT (OpenAI), nevertheless requires a considerable amount of energy.

In this context, the company presented, in March, its new graphics card (GPU), called Blackwell, which it describes as “ most powerful chip in the world “. According to Nvidia, it makes it possible to develop and run generative AI language models at a cost and energy consumption divided by 25 compared to its predecessor. Deliveries of the Blackwell are expected later this year, the group said.

We are fundamentally changing data processing and computer capabilities », argued Jensen Huang during the conference call presenting the results.

Other innovations must also see the light of day. For example, the Gr00t project must equip robots so that they can understand what people say, imitate their movements, and learn from their own experience on how to interact with the world, explains Nvidia.

How Nvidia became the essential barometer of the artificial intelligence boom

A bright future

Forecasts released Wednesday show the semiconductor designer sees the market continuing to grow at a breakneck pace. In total, the company’s turnover increased 3.6 times over one year, to $26 billion. And for the future, Nvidia expects a turnover of 28 billion dollars for its second financial quarter, a level much higher than the 26.6 billion projected by analysts.

Nvidia defied gravity again », Commented Jacob Bourne, analyst at Emarketer. “ His bold decisions can be expected to keep him in his position until further notice. “.

The concerns that some investors had about a short-term downturn seem to have evaporated with these positive forecasts », Reacted Lucas Keh, analyst at Third Bridge.

However, attention is also focused on its weak points. Because unlike its rivals Intel, Micron and Texas Instruments, Nvidia does not manufacture its own semiconductors but uses subcontractors, such as Taiwan Semiconductor Manufacturing (TSMC). Given geopolitical tensions between Taiwan and mainland China, this could be a weak point, and the United States has banned Nvidia from supplying its most efficient chips to Chinese companies.

(With AFP)

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