SAN FRANCISCO: Nvidia Corp, the world’s most valuable company, gave a strong revenue forecast for the current period, helping counter concern that a global surge in artificial intelligence (AI) spending is poised to fizzle.
Sales will be about US$65bil in the fiscal fourth quarter, which runs through January, the chipmaker said in a statement Wednesday.
Analysts had estimated US$62bil on average, with some predictions ranging as high as US$75bil.
The outlook signals that demand remains strong for Nvidia’s AI accelerators, the pricey and powerful chips used to develop AI models.
Nvidia has faced growing fears that the runaway spending on such equipment isn’t sustainable.
“Compute demand keeps accelerating,” chief executive officer Jensen Huang said in the statement.
“AI is going everywhere, doing everything, all at once.”
Nvidia shares gained about 3% in late trading after the report was released.
They had been up 39% this year through the close.
Huang has repeatedly downplayed concerns about an AI bubble, saying last month that the company has more than US$500bil of revenue coming over the next few quarters.
Owners of large data centres will continue to spend on new gear because AI has begun to pay off, he said.
Revenue rose 62% to US$57bil in the fiscal third quarter, which ended Oct 26. Profit was US$1.30 a share. Analysts had predicted sales of US$55.2bil and earnings of US$1.26 a share.
Nvidia’s main data centre unit had revenue of US$51.2bil in the quarter, compared with an average estimate of US$49.3bil.
Chips used in gaming personal computers – once the company’s chief source of revenue – delivered sales of US$4.3bil. That compares with an average estimate of US$4.4bil.
The forecast for the latest quarter reflects a staggering run for the company.
Sales will be up about 10-fold from where they were in the same period just three years ago.
And Nvidia is on course to deliver more annual net income than two longtime rivals – Intel Corp and Advanced Micro Devices Inc – will report in sales.
But Nvidia’s expansion has faced challenges. US restrictions on the shipment of advanced chips to China have largely locked Nvidia out of a massive market for its products.
Huang has lobbied Washington to overturn those rules – arguing that they’re counterproductive to the national security concerns they’re meant to serve. But even after some rollback of the toughest elements, Nvidia isn’t currently projecting any sales from AI accelerators in China.
Some investors also have expressed concerns about the structure of the megadeals that Nvidia has struck with customers.
The transactions involve investments in startups such as OpenAI and Anthropic PBC, raising the issue of whether the pacts are creating artificial demand for computers.
Earlier this week, Nvidia and customer Microsoft Corp said they’ve committed to invest as much as US$15bil in Anthropic.
The startup has also pledged to purchase US$30bil of computing capacity from Microsoft’s Azure cloud service and will work with Nvidia’s engineers on fine-tuning chips and AI models.
Meanwhile, some of Nvidia rivals have grown more optimistic that they can finally challenge the company’s dominance in AI accelerators.
Earlier this month, Advanced Micro Devices Inc predicted accelerating growth for its AI chip business and talked up the prospects for forthcoming products.
AMD, Broadcom Inc and Qualcomm Inc have all announced tie-ups with large users of Nvidia’s chips. And data centre operators are increasingly looking to use more in-house designs – an effort that would make them less dependent on Nvidia supply.
But Huang is also pushing to spread the use of AI across more of the worldwide economy. The CEO has embarked on a globe-trotting tour to persuade government bodies and corporations to deploy his technology.
Nvidia, founded in 1993, pioneered the market for graphics chips used to create realistic images for computer games. AMD is its only remaining major rival in that business.
Nvidia built its AI dominance by adapting that same chip architecture to crunch massive amounts of data – helping researchers create software that’s begun to rival and resemble human capabilities. — Bloomberg
