Nvidia, the chip-making giant, has reported a staggering 843% surge in its fiscal second-quarter profit, surpassing expectations and sending its shares soaring in after-hours trading. The company’s net profit for the three months ending in July reached nearly $6.2 billion, a massive jump from $656 million during the same period last year. Earnings per share rose from 26 cents to $2.48 year-on-year.
The revenue for the May to July period more than doubled compared to the previous year, reaching $13.5 billion, exceeding Refinitiv’s forecast of $11.2 billion. This marks the first time Nvidia has achieved quarterly revenue of over $10 billion. The strong performance was driven by the company’s data center business, particularly the A100 and H100 AI chips used for generative AI technologies like ChatGPT. The data center division’s revenue hit a record $10.3 billion, representing a 171% increase year-on-year.
Nvidia’s gaming unit also contributed significantly to its growth, generating nearly $2.5 billion in revenue, up 22% from the same period the previous year. Meanwhile, the professional visualization and automotive units added $379 million (down 24%) and $253 million (up 15%) respectively in the last quarter.
The California-based company, known for designing and manufacturing AI hardware and software graphics processing units, has been a major beneficiary of the AI boom. Nvidia’s success can be attributed to its position as a leading provider of chips for accelerated computing, as well as its commitment to research and development. The company invested $2 billion in R&D during the last quarter, representing over 15% of its total revenue.
The impressive financial results led Nvidia to raise its outlook for the third quarter, with a predicted revenue of approximately $16 billion, compared to Refinitiv’s forecast of $12.6 billion. This would signify a year-on-year revenue jump of over 170%. The company’s stock price also witnessed a 3.17% increase to close at $471.16 a share, with shares surging up to 9.5% in after-hours trading.
Looking ahead, Nvidia is well-positioned to capitalize on the growing trend of AI adoption. The company’s CEO and founder, Jensen Huang, stated that a new computing era has begun, with companies worldwide transitioning from general-purpose to accelerated computing and generative AI. Given the strong demand for Nvidia’s products globally, the company does not anticipate any immediate material impact from potential export restrictions on its data center GPUs.
Nvidia’s stellar performance has elevated its market value to $1.16 trillion, placing it among the ranks of Apple, Microsoft, Amazon, and Google parent company Alphabet as the only US companies with a market cap exceeding $1 trillion. Market analysts remain optimistic about Nvidia’s future prospects, although the company will face increased pressure to meet high investor expectations.
In conclusion, Nvidia’s second-quarter profit surge, driven by its data center and gaming units, has exceeded all expectations. The company’s commitment to AI hardware and software development has made it a key player in the industry. With a positive outlook for the third quarter and continued investment in research and development, Nvidia is well-positioned to maintain its lead in the rapidly growing AI market.
