David Nicholas, president and founder of Nicholas Wealth Management, talks about Nvidia stock and why we should pay attention after the Argentine election.
Nvidia continued to soar amid a boom in demand for its artificial intelligence (AI) chips, reporting big jumps in revenue and net profit – although its stock fell in after-hours trading on concerns about trading restrictions.
The AI giant reported a 206% year-over-year and 34% quarter-over-quarter increase in revenue to more than $18 billion, beating estimates of $16 billion in the company’s third quarter of fiscal 2024. Net income rose 49% quarter-on-quarter and 1,259% year-over-year to $9.2 billion.
“Our strong growth reflects the industry platform’s broad transition from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and CEO of Nvidia. “Large language model startups, consumer internet companies and global cloud service providers have been the pioneers, and the next waves are beginning to emerge.”
“Nations and regional CSPs are investing in AI clouds to meet local demand, enterprise software companies are adding AI co-pilots and assistants to their platforms, and companies are building custom AI to automate the world’s largest industries,” he added. “Nvidia GPUs, CPUs, networking, AI foundry service and Nvidia AI enterprise software are all growth engines at full speed. The era of generative AI is dawning.”
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Nvidia’s earnings report showed a massive year-over-year increase in revenue and net profit as the company capitalizes on the AI boom. (Jakub Porzycki/NurPhoto via Getty Images / Getty Images)
A headwind for Nvidia is the US government’s export controls. Restrictions on advanced chip exports to China and other countries of concern announced this year by the Biden administration could hurt Nvidia’s business once they take effect.
The export controls require the company to obtain a license from the Commerce Department to sell certain advanced chips to China, Vietnam and several countries in the Middle East – which the company said include Saudi Arabia and the United Arab Emirates, among others. and excludes Israel.
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Nvidia plans to launch new products that comply with export control regulations to enable sales of AI chips to China and certain countries in the Middle East. (Portal/Tyrone Siu / Portal Photos)
Colette Kress, Nvidia’s chief financial officer, said the company plans to launch products that comply with export controls in the coming months, but noted that about a quarter of the company’s revenue comes from its data center segment, which is in the third quarter In the quarter, sales of $14.5 billion came from countries subject to export controls.
“We expect our sales to these targets to decline significantly in the fourth quarter of fiscal 2024, although we believe the decline will be more than offset by strong growth in other regions,” she said.
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Jensen Huang, co-founder and CEO of Nvidia Corp., speaks during the Taipei Computex Expo in Taipei, Taiwan, Monday, May 29, 2023. (Photographer: I-Hwa Cheng/Bloomberg via Getty Images / Getty Images)
Nvidia shares lost 0.92% in Tuesday trading and fell about 1.4% in after-hours trading. Despite Tuesday’s decline, Nvidia shares are up over 248% so far in 2023.
| ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVDA | NVIDIA CORP. | 499.44 | -4.65 | -0.92% |
While the AI space was rocked by the recent ouster of OpenAI CEO Sam Altman, the possible emergence of a new AI chip competitor was not discussed in Nvidia’s earnings call.
According to a report by Bloomberg, before his ouster, Altman was fundraising in the Middle East for an early-stage AI chip project codenamed Tigris.
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Altman’s AI chip project would aim to provide a lower-cost alternative to Nvidia’s chips, potentially challenging its status as a leader in producing the chips and processors needed to power large language models. Other technology companies, including OpenAI, have also considered making their own chips.