Chip designer Nvidia has announced its third-quarter revenue forecast above Wall Street expectations and revealed plans to repurchase an additional $25 billion of its shares. The company’s sales have been skyrocketing due to strong demand for its chips, which power various artificial intelligence applications globally. As a result, Nvidia’s shares surged by 6.3% during after-hours trading. The company’s impressive performance in the AI sector has led to its shares tripling this year and cemented its position as the first-ever trillion-dollar chip business.
Industry analysts have observed that the demand for Nvidia’s AI chips is outstripping supply by at least 50%, a situation expected to persist over the next few quarters. This surge in demand is driven by companies worldwide shifting towards accelerated computing and generative AI. To meet the rising need for their chips, Nvidia is receiving orders from a wide range of sources, from AI startups to major cloud services providers like Microsoft. Notably, Chinese companies are also rushing to stock up on Nvidia chips before any potential additional export restrictions imposed by the US.
Nvidia’s strong financial performance was reflected in its second-quarter results, with adjusted revenue reaching $13.51 billion, surpassing estimates of $11.22 billion. Furthermore, the company’s data center business saw a remarkable increase of 141% to $10.32 billion in the quarter, surpassing analyst expectations by over $2 billion. Nvidia’s positive earnings report had a ripple effect, driving up the shares of other major technology companies, including Microsoft, Meta Platforms, and Palantir Technologies during extended trading.