Nvidia’s upbeat sales forecast shows AI boom remains strong

Nvidia Corp. said its fiscal first-quarter sales will be about US$78 billion. Photo by Lionel BONAVENTURE/AFP via Getty Images files

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Nvidia Corp., the world’s most valuable company, gave another bullish quarterly revenue forecast, signaling that the massive build-out of AI computing remains on track.

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Fiscal first-quarter sales will be about US$78 billion, the chipmaker said in a statement Wednesday. That compares with an average Wall Street estimate of $US72.8 billion, according to data compiled by Bloomberg.

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“Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth,” chief executive Jensen Huang said in the statement.

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The outlook helped soothe concerns about a bubble in AI investments. Huang has repeatedly downplayed fears that the run-up in spending on artificial intelligence hardware isn’t sustainable. He argues that it will take years to replace the world’s installed base of older computers with machines that offer a leap forward in productivity.

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But some investors had grown weary of that optimism and traded out of stocks like Nvidia. Wednesday’s report provides some evidence that near-term worries may be overblown.

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Nvidia shares, among the 10 worst-performing chipmaker stocks this year, rose about four per cent in extended trading following the announcement.

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Nvidia is the dominant seller of accelerator chips, processors designed to handle the huge amounts of data needed to create artificial intelligence models. The semiconductors are also used to run the software — a stage known as inference — when it carries out tasks in response to real-world inputs. Nvidia has branched out into general-purpose processors, networking and full computer systems, giving it an even greater hold on customers.

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In the fiscal fourth quarter, which ended Jan. 25, revenue gained 73 per cent to US$68.1 billion. Profit was US$1.62 a share, excluding certain items. Analysts had predicted US$65.9 billion in sales and US$1.53 a share in earnings.

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Adjusted gross margin, the percentage of revenue remaining after deducting costs of production, was 75.2 per cent. That also edged past estimates.

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One cloud hanging over the tech industry: a shortage of memory chips. Like much of the electronics industry, Nvidia’s products are reliant on a steady supply of these components, which provide short-term storage in everything from smartphones to supercomputers. Supply constraints have sent memory prices soaring and made it harder to ship as many devices this year.

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Santa Clara, California-based Nvidia said in its report that the company has enough supplies. “We have strategically secured inventory and capacity to meet demand beyond the next several quarters,” it said.

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Nvidia’s data center unit, which is responsible for its industry-leading AI accelerator and networking products, had revenue of US$62.3 billion in the quarter. That compares with an average analyst estimate of US$60.4 billion.