Nvidia Smashes Estimates with Bumper Earnings

Nvidia shares climbed 6% in extended trading on Wednesday after the chipmaker smashed estimates for its fiscal second quarter and issued optimistic guidance for the current period.

Revenue in the second quarter doubled from $6.7 billion a year earlier and increased 88% from the prior period.

Nvidia said it expects an even stronger fiscal third-quarter revenue performance, with $16 billion expected revenue, much higher than the forecast $12.61 billion.

Nvidia’s strong sales and forecast underscore how central the company’s graphics processing units (GPUs) have become to the generative AI boom. Nvidia’s A100 and H100 AI chips are needed to build and run AI applications like OpenAI’s ChatGPT and other services that take simple text queries and respond with conversational answers or images.

The chipmaker’s products are in high demand in the trillion-dollar global data center market, which is currently transitioning into accelerated computing and generative AI.

Indeed, Nvidia’s performance was driven by its data center business, which includes AI chips. The company reported $10.32 billion in revenue for the group, up 171% year over year and above the $8.03 billion estimate.

What does this mean for me?

Even before Wednesday’s report, Nvidia’s stock price had more than tripled for the year, making it the top performer in the S&P 500.

During its latest earnings call, the company asserted it would not be immediately affected by proposed Biden administration export restrictions on chips, given the strength of demand for its products around the world.