{"id":52419,"date":"2023-08-24T08:29:34","date_gmt":"2023-08-24T12:29:34","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/nvidias-stock-soars-after-ai-boom-pushes-chip-giant-to-record-earnings-and-blowout-forecast\/"},"modified":"2023-08-24T08:29:36","modified_gmt":"2023-08-24T12:29:36","slug":"nvidias-stock-soars-after-ai-boom-pushes-chip-giant-to-record-earnings-and-blowout-forecast","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=52419","title":{"rendered":"Nvidia\u2019s stock soars after AI boom pushes chip giant to record earnings and blowout forecast"},"content":{"rendered":"

Nvidia Corp. shares rallied in the extended session Wednesday after the maker of graphics processing units that is leading the AI-hardware charge reported a 141% surge in data-center sales and record results.<\/p>\n

Nvidia
\n NVDA,
\n +3.17%<\/bg-quote>
\n shares rallied 6.6% after hours, following a 3.2% rise in the regular session to close at $471.16, less than 1% below the stock\u2019s record closing high of $474.94, set on July 18, according to FactSet data. A close at such levels on Thursday would mean a new record high for the stock.<\/p>\n

\n

Nvidia forecast third-quarter revenue of $15.68 billion to $16.32 billion, while analysts had estimated $12.59 billion, with $9.15 billion of that coming from data-center sales. <\/p>\n

\u201cWe\u2019re seeing two simultaneous platform shifts at the same time,\u201d Chief Executive Jensen Huang told analysts. \u201cOne is accelerated computing,\u201d he said, then, \u201cgenerative AI enabled by accelerated computing came along. And this incredible application now gives everyone two reasons to transition to do a platform shift from general-purpose computing \u2014 the classical way of doing computing \u2014 to this new way of doing computing: accelerated computing.\u201d<\/p>\n

For the year, Wall Street, on average, expects earnings of $8.29 a share on $44.54 billion in revenue, a 71% increase from fiscal 2023\u2019s $26.97 billion, with $32.41 billion of that in data-center sales.<\/p>\n

The Santa Clara, Calif.-based company reported second-quarter net income of $6.19 billion, or $2.48 a share, compared with $656 million, or 26 cents a share, in the year-ago period. Only <\/p>\n

Adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.70 a share, compared with 51 cents a share in the year-ago period.<\/p>\n

Revenue surged to a record $13.51 billion from $6.7 billion in the year-ago quarter, driven by a 141% leap in data-center revenue to $10.32 billion.<\/p>\n

Analysts surveyed by FactSet had forecast earnings of $2.08 a share on revenue of $11.19 billion, and data-center sales of $8.03 billion.<\/p>\n

Nvidia Chief Financial Officer Colette Kress said that \u201cstrong demand\u201d for the company\u2019s HGX platform \u201cwas primarily driven by the development of large language models and generative AI.\u201d<\/p>\n

The ramp-up of those products to supply strong demand was key in raising the company\u2019s gross margin to 71.2% from 45.9% year ago, and from the first quarter\u2019s 64.2%, Kress told MarketWatch in a post-conference-call interview. Data-center products, \u201cbecause of the complexity and the software that\u2019s included\u201d in Nvidia\u2019s chips, boosted margins as the company ramped up their production to satisfy growing demand, Kress told MarketWatch.<\/p>\n

\u201cThe rise of data-center grows the company\u2019s margins,\u201d Kress said.<\/p>\n

Earlier, Kress told analysts that it\u2019s not just the company\u2019s cutting-edge architecture that\u2019s driving HGX sales. The system not only includes the Grace Hopper superchip, it also uses the company\u2019s previous-generation architecture Ampere hardware.<\/p>\n

\u201cWe are still selling both of these architectures in the market,\u201d Kress told analysts. \u201cNow, when you think about that, what does that mean from both the systems as a unit? Of course, it\u2019s growing quite substantially, and that is driving in terms of the revenue increases.\u201d<\/p>\n

Right after the report, Lopez Research analyst Maribel Lopez told MarketWatch that Nvidia\u2019s \u201cnumbers prove just how much money there is in the AI hardware opportunity.\u201d<\/p>\n

\u201cWhile cloud companies are selling AI services, Nvidia is walking\u00a0away with a bulk of the revenue and profits,\u201d Lopez said. \u201cNvidia\u2019s minting cash with no apparent slowdown in sight.\u201d<\/p>\n

Nvidia shares are up more than 222% on a year-to-date basis, compared with a 42% surge in the PHLX Semiconductor Index
\n SOX,<\/span>
\n a 15.5% rise by the S&P 500
\n SPX
\n and a 31% gain by the tech-heavy Nasdaq Composite
\n COMP
\n over the same span.<\/p>\n

Even with shares at such record highs, Nvidia said its board approved an additional $25 billion in share repurchase power to its $3.95 billion remining under a previous authorization.<\/p>\n

Huang also stressed the importance of its growing partnership with VMware Inc.
\n VMW,
\n +1.23%<\/bg-quote>,<\/span>
\n announced Tuesday.<\/p>\n

\u201cWe\u2019ve been working several years with VMware to make it possible for VMware to support not just the virtualization of CPUs, but the virtualization of GPUs,\u201d Huang said, adding that the partnership allows the distributed computing capabilities of GPUs and AI libraries to be sold by VMware\u2019s sales force.<\/p>\n

Read: <\/strong>Will AI do to Nvidia what the dot-com boom did to Sun Microsystems? Analysts compare current hype to past ones.<\/p>\n

Nvidia is only one of a handful of companies to report dramatic profit surges this earnings season. Nvidia\u2019s unadjusted net income soared 844% from a year ago. Of the large tech companies this earnings season, cybersecurity company Palo Alto Networks Inc.
\n PANW,
\n +0.47%<\/bg-quote>
\n reported a 6,800% surge from a year ago, according to Dow Jones data.<\/p>\n

Nvidia, which has stood as the largest publicly traded chip maker by market cap since February, having traded that title back and forth with Taiwan Semiconductor Manufacturing Co.
\n TSM,
\n +2.15%<\/bg-quote>
\n since late 2020, closed above the $1 trillion mark officially for the first time on June 14. Nvidia ended Wednesday with a valuation of $1.164 trillion, and one analyst thinks it could be the most valuable U.S. company in a few years. <\/p>\n

Nvidia currently stands as the fifth-largest U.S. company by market cap behind Apple Inc.
\n AAPL,
\n +2.19%<\/bg-quote>,<\/span>
\n Microsoft Corp.
\n MSFT,
\n +1.41%<\/bg-quote>,<\/span>
\n Alphabet Inc.
\n GOOG,
\n +2.71%<\/bg-quote><\/p>\n

GOOGL,
\n +2.55%<\/bg-quote>
\n and Amazon.com Inc.
\n AMZN,
\n +0.95%<\/bg-quote>.<\/span>
\n While all have a big stake in the future of AI, the latter three companies are scrambling to outfit their cloud-service provider data centers with new AI gear amid tight supply.<\/p>\n

While Nvidia is considered the overwhelming leader in the AI chip market, Advanced Micro Devices Inc.
\n AMD,
\n +3.57%<\/bg-quote>
\n is considered a distant second. AMD\u2019s data-center numbers declined in the company\u2019s recent earnings report, although the company didn\u2019t have comparable AI chip sales in its results. <\/p>\n

Shares of AMD and TSMC were both up more than 3% after hours Wednesday.<\/p>\n

See also: <\/strong>Nvidia \u2018should have at least 90%\u2019 of AI chip market with AMD on its heels<\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Nvidia Corp. shares rallied in the extended session Wednesday after the maker of graphics processing units that is leading the AI-hardware charge reported a 141% surge in data-center sales and record results. Nvidia NVDA, +3.17% shares rallied 6.6% after hours, following a 3.2% rise in the regular session to close at $471.16, less than 1% […]<\/p>\n","protected":false},"author":1,"featured_media":52420,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-52419","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nNvidia\u2019s stock soars after AI boom pushes chip giant to record earnings and blowout forecast | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Nvidia Corp. shares rallied in the extended session Wednesday after the maker of graphics processing units that is leading the AI-hardware charge reported\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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