Nvidia lives up to expectations: the AI boom has not slowed down and its performance is comprehensively crushing expectations

Editor: Niu Zhanlin

Source: Financial Associated Press

After the U.S. stock market closed on Wednesday, Nvidia, the leader in artificial intelligence (AI), announced its second-quarter results. As demand for its artificial intelligence processors surged, the company issued a shocking third-quarter revenue outlook while its second-quarter results beat expectations across the board, sending its shares soaring after hours. More than 10%.

Specifically, Nvidia’s second-quarter revenue was $13.51 billion, analysts expected $11.04 billion; second-quarter adjusted earnings per share were $2.70, analysts expected $2.07.

Nvidia's fiscal second-quarter revenue target was 23% higher than Wall Street's forecast, almost catching up with the company's total revenue for fiscal 2021, underscoring Nvidia's impressive growth.

In terms of business, data center revenue in the second fiscal quarter reached US$10.32 billion, a year-on-year increase of 171%, far higher than the market expectation of US$7.98 billion. In this way, Nvidia quickly got rid of the impact of the decline in the chip industry, and its sales growth rate reached the highest level in many years.

The revenue of the game business in the second quarter was US$2.49 billion, an increase of 22% year-on-year and an increase of 11% quarter-on-quarter, which was 4.6% higher than analysts’ expected revenue of US$2.38 billion. In the first quarter, it decreased by 38% year-on-year and increased by 22% quarter-on-quarter.

Analysts estimate that Nvidia's artificial intelligence chips may be in short supply for some time, and this situation will remain in the next few quarters.

The AI boom is not slowing down

Nvidia CEO Jensen Huang previously said in a statement: "A new era of computing has begun, and the computer industry is undergoing two simultaneous transformations, accelerated computing and generative artificial intelligence."

Artificial intelligence has been the hottest topic among investors this year, with every major company talking up its capabilities in the space. But Nvidia is one of the few companies making big money from the trend, which has accelerated since the public debut of OpenAI's ChatGPT last November.

Since May of this year, when artificial intelligence technology has been frantically sought after, Nvidia's stock price has taken advantage of the momentum, becoming the first semiconductor company with a market value of US$1 trillion.

The company has emerged as a major provider of the infrastructure that powers artificial intelligence systems, but investors have been waiting for more evidence that its second quarter was the start of a long expansion rather than a one-off spike.

Like many of its peers, Nvidia does not have its own chip production business, but relies on chip foundries provided by TSMC and Samsung Electronics. This arrangement insulates Nvidia from the huge expense and risk of investing in manufacturing operations, but it also cripples its ability to adjust supply quickly.

Therefore, some analysts worry that chip supply constraints may hinder Nvidia's sales this quarter, but its latest outlook shows that chip production is very smooth and the boom in artificial intelligence investment has not slowed down.

Q3 revenue guidance and market commentary

In its fiscal third-quarter outlook, Nvidia said it would generate around $16 billion in revenue for the three months ending in October, compared with analysts' average estimate of $12.5 billion, underscoring Nvidia's role in the AI boom Primary beneficiary status.

It is worth noting that Nvidia also announced an additional $25 billion share repurchase plan, and the company plans to continue to repurchase shares this fiscal year.

In addition, as the leader of the technology industry, Nvidia is also becoming more and more important. The chipmaker's forecast offers investors a window into how much some of the world's most valuable companies are willing to spend to revamp computer systems for a new era of artificial intelligence.

Industry analysts commented that Nvidia’s substantial growth in the second quarter’s performance, as in the first quarter, indicated continued strong demand for Nvidia’s data center business, while guidance for the third quarter was 29% higher than market expectations, And as data center contribution increases, gross margins will likely continue to rise.

Jacob Bourne, senior analyst at Insider Intelligence, said: "The company's fiscal second-quarter results underscored its dominance in artificial intelligence chips. It matters."

Wedbush analyst Daniel Ives said that Nvidia's performance and outlook forecast "is a historic moment in the technology industry, indicating that the wave of artificial intelligence spending is coming in the next few years." The “fuel” for a rally in tech stocks that we expect to see continue through the end of the year.