These chips have effectively dispelled concerns regarding potential pullbacks from tech giants investing heavily in AI processing and data centers.
The global AI backed fabless firm Nvidia recently announced its quarterly financial results, surpassing market expectations. The company reported revenue of $35.08 billion, a 94 percent increase from the same quarter last year, exceeding the anticipated $33.15 billion. Profits more than doubled year-over-year, with earnings per share at $0.81, above the expected $0.75. Nvidia projects a 70 percent revenue increase in the upcoming quarter. Despite these strong figures, Nvidia’s stock experienced volatility, initially dropping about 5 percent in extended trading before stabilizing around the previous close of $145.89.
The point is how the company has been growing its revenue rapidly. Jensen Huang, the visionary leader of Nvidia, recently declared that he anticipates the computing power propelling advancements in generative AI to skyrocket by an astonishing “a millionfold” within the next decade. During a pivotal earnings call, he elucidated how the sweeping global adoption of Nvidia technology is catalyzing a monumental shift from traditional coding to machine learning, prompting the reimagining of data centers to foster AI innovation.
“Generative AI is not merely a new software capability; it represents the dawn of a transformative industry where AI factories produce digital intelligence—a revolutionary era poised to cultivate a multi-trillion-dollar AI market,” Huang asserted. He stressed, “AI is revolutionizing every industry, every company, and every nation,” indicating the creation of an omniverse of synthetically generated data and emphasizing that the age of robotics is on the horizon.
The soaring demand for Nvidia’s Blackwell GPU chips has effectively dispelled concerns regarding potential pullbacks from tech giants investing heavily in AI processing and data centers. Nvidia’s stock has also rebounded impressively after a summer dip, surging 45 percent since August’s low. With nearly 200 percent gains this year and an astounding over 1,100 percent increase in the past two years, it has reached record highs in the wake of the recent election.
In contrast, many of Nvidia’s competitors in chip manufacturing have become a liability for the industry, struggling to keep pace with Nvidia’s remarkable AI supremacy. Prior to the announcement of the results, Wedbush analyst Dan Ives confidently predicted another “drop-the-mic performance” for Nvidia, noting it is firmly positioned as “the only game in town,” with more than $1 trillion in AI capital expenditures on the horizon. He emphasized that Nvidia’s GPUs have become “the new oil and gold in this world.”
The world’s leading tech companies have significantly boosted their investments in AI over the past few quarters, establishing Nvidia as a substantial beneficiary of this trend. Widely regarded as a pioneer for the technology sector and the insatiable demand for artificial intelligence, Nvidia has been a driving force behind the multiple record highs seen on Wall Street this year. However, escalating tensions from the Russia-Ukraine war, the looming threat of global tariff hikes from Donald Trump’s incoming administration, and the likelihood that the Federal Reserve will maintain current US interest rates have left markets worried.
Analysts largely concur with Ives’s optimistic view that demand for Nvidia’s new Blackwell chip could catapult Nvidia’s sales and market capitalization to unprecedented heights. Charu Chanana, Saxo’s chief investment strategist, noted signs of “extraordinary demand” for the new chip, such as forecasts indicating record sales and reports of inventories being completely sold out for the upcoming year, which are compelling indicators of Nvidia’s sustained strong performance. That said, Chanana cautioned that “any signs of production delays or a dip in demand could exert pressure on the stock, given its already stretched valuation.”
Earlier this week, a report surfaced about Nvidia facing overheating issues with servers specifically for its newest graphics chip, the B200 & GB200 NVL72, both named in honor of David Harold Blackwell, a renowned American mathematician and statistician. While a spokesperson for Nvidia did not directly deny the report, they emphasized, “the engineering iterations are normal and expected.”
