Nvidia's shares surged to their highest levels in more than a year following the CEO Jensen Huang had described the current time. He said that it is an "inflection point" for the computing industry and highlighted the potential of the $600bn market for AI chips.
The company presented its new AI "supercomputer", Nvidia DGX. It allows business customers to connect AI-related technology via cloud computing providers like Microsoft and Oracle. This leads to creating a new market for "AI-as-a-service" for thousands of companies globally.
Also, such an AI breakthrough intersects with the announcement of ChatGPT this year. Experts predict that generative AI will account for 10% of all data produced by 2025, up from 1% in 2021. KGI researchers describe this as adding between $5B and $6B to Nvidia's profit over the next three years.
Speaking to investors on a conference call, Huang said that every significant platform change in computing happened because it was easier to use, easier to program, and more accessible. He highlighted that Nvidia's new AI supercomputer could put the company in a leadership position in a market that could be worth over $600bn. Nvidia's shares reached 14.7% in early trading on Thursday and changed ownership at $237.98 each, valuing the company at approximately $585bn.
In the matter of its fourth-quarter earnings, Nvidia announced an adjusted bottom line of 88 cents per share, which was down 33% from the previous year, but topped Wall Street forecasts by around 7 cents. The chipmaker's revenues came in at $6.05bn, again beating analysts' estimates due to strong gains in its gaming chip business.
Looking ahead to the current quarter, Nvidia anticipates that revenues will likely rise 7.4% on a sequential basis to $6.5bn, with gross margins expanding 80 basis points to around 64.1%.
Data center revenues were up 11% from last year at $3.62bn but fell around 6% from the previous quarter due to a pullback in cloud expenses and Covid-19 commotion in China.
Gaming income got up 16% from the prior quarter to $1.83bn but fell more than 47% from last year, partially due to enhancing/increasing demand for its RTX 40 Series GPUs.
In addition to the new AI “supercomputer”, Nvidia's recent agreement with Microsoft may also lead to long-term benefits. If regulators in the US and Europe approve Nvidia's planned $69bn takeover of Activision ATVI, the company will be able to stream video games like "Call of Duty" via its GeForce Now service. Nvidia Senior Vice President Jeff Fisher said that this collaboration would impel cloud gaming into a mainstream offering that attracts gamers at all levels of interest and experience.