Once more, Nvidia surpasses sales records.
Investors in the USA are anticipating Nvidia's quarterly earnings with bated breath. As predicted, the tech giant exceeded expectations yet again, posting record-breaking results. Despite this, analysts showed disappointment due to the sky-high anticipations. Consequently, the stock price plummeted considerably.
The surge in AI technology is boosting Nvidia's continuous growth at present. In a statement, CEO Jensen Huang declared, "Nvidia achieved record revenue due to the worldwide upgrade of data centers for AI." However, the corporate heavyweight in AI high-performance chips failed to satisfy the lofty expectations of investors regarding its future projections. As a result, the stock dipped by approximately 3% in late trading hours on Wall Street. Despite this, it was still trading around 150% higher than its initial value for the year.
In the last quarter, Nvidia's revenue surge by a staggering 122% to hit an impressive $30 billion, marking the fifth consecutive quarter of triple-digit growth. Analysts had foreseen a 112% increase. The adjusted earnings per share grew by 152% to $0.68. However, the profit margin stood at 75.7%, slightly less than the projected figure due to escalating production capacity costs.
For the current quarter, Nvidia has projected revenue of $32.5 billion, with a margin of error of ±2%, and an adjusted operating margin of 75%, with ±0.5% margin of error. Analysts had estimated revenue of $31.69 billion and a profit margin of 75.5%. Michael Schulman, the chief investment officer of Running Point, commented, "We're now bumping up against the law of large numbers with this company. As a company grows beyond a certain size, maintaining the same growth rate becomes increasingly difficult."
Blackwell Flagship Processor Goes on Sale
During the announcement, CEO Huang revealed that the initial batches of the latest AI processor, codenamed "Blackwell," have been dispatched. Previous-generation "Hopper" chips continue to enjoy strong demand, according to Huang.
However, analyst Jean-Paul van Oudheusden of eToro expressed concerns about the impact of US sanctions on China on Nvidia's growth prospects. He argued, "Restricted access to advanced AI chips in China suppresses Nvidia's market possibilities. Tactical modifications are essential, which may result in additional expenditures."
To counteract these challenges, Nvidia has already introduced lightweight AI chip versions tailored for the Chinese market. Moreover, the company is facing intensified competition. AMD is attempting to bridge the gap with the market leader through strategic acquisitions. Startups like IPO candidate Cerebras are eyeing a share of the lucrative market. In China, Huawei reportedly plans to introduce a new AI chip generation soon.
The Commission, recognizing Nvidia's recent successes, encouraged further investments in AI technology to maintain its competitive edge. However, the Commission also emphasized the need for Nvidia to manage its production costs effectively to meet the increasing investor expectations.
In light of the US sanctions on China, the Commission suggested Nvidia to explore new markets and develop strategic partnerships to mitigate the potential impact on its growth. The Commission acknowledged the intensified competition from companies like AMD and startups in the market, emphasizing the importance of innovation and adaptability in Nvidia's future plans.
