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HomeBusinessNvidia's AI Success Surpasses Wall Street's High Expectations, Outperforms Projections

Nvidia’s AI Success Surpasses Wall Street’s High Expectations, Outperforms Projections

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Nvidia, the US chipmaker, reported a significant increase in revenue during the latest quarter, driven by soaring demand for chips used in training artificial intelligence (AI) models. The company’s revenue more than doubled, surpassing even the heightened estimates on Wall Street. Nvidia also projected a larger leap in revenue for the current quarter, indicating that it is overcoming supply constraints faster than anticipated. As a result, the company’s stock price rose 6% in after-market trading, contributing to its market value tripling this year to about $1.2tn.

Nvidia’s success can be attributed to the surging demand for its GPUs, which dominate the AI model training market. The company has become the biggest beneficiary of the AI-fueled tech rally that has supported the broader US stock market this year. Despite concerns about the durability of the sales boom, Nvidia’s CEO, Jensen Huang, reiterated that the increased demand represents a long-term industry transition towards accelerated computing and generative AI. The second-quarter revenue surge was driven by sales to data center customers, which reached $10.3bn, indicating a shift in capital investment towards Nvidia’s chips instead of general-purpose computing.

Interestingly, Nvidia’s sales growth occurred despite US regulations aimed at preventing the export of advanced AI chips to China, one of its major markets. To comply with the rules, Nvidia introduced less powerful versions of its top-of-the-line AI chips for the Chinese market. Sales to Chinese customers accounted for around 20-25% of Nvidia’s data center revenue during the latest quarter. The company’s CFO, Colette Kress, defended the high level of exports to China and stated that they do not anticipate any tightening of US export controls. The revenue increase also led to a rise in after-tax profits for Nvidia, reaching almost $6.2bn compared to slightly over $2bn the previous year.

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