Nvidia, a chip designer, has announced its optimistic third-quarter revenue forecast, surpassing Wall Street’s expectations. The company attributes this growth to the soaring demand for its chips, which power the majority of artificial intelligence (AI) applications worldwide. As a result, Nvidia’s shares rose 6.3% in after-hours trading and have tripled in value this year, making it the first trillion-dollar chip business. Industry analysts predict a 50% shortage in the supply of Nvidia’s AI chips and expect this imbalance to persist for several quarters as more companies shift towards accelerated computing and generative AI.
The demand for Nvidia’s chips is not limited to AI startups and major cloud service providers like Microsoft. Chinese companies are also rushing to stockpile chips before potential U.S. export restrictions are imposed. With the transition from general-purpose to accelerated computing gaining momentum globally, Nvidia anticipates continued strong demand. The company’s reported data center business revenue for the second quarter exceeded expectations by over $2 billion, reaching $10.32 billion, representing a 141% increase. This positive news also had a ripple effect on other Big Tech stocks and AI-related companies, with Microsoft, Meta Platforms, and Palantir Technologies experiencing a surge in share prices during after-hours trading.
In light of its robust performance, Nvidia announced a $25 billion share buyback program, reinforcing its confidence in sustaining growth in the chip market. The company’s CEO, Jensen Huang, highlighted the significant shift towards accelerated computing and generative AI, indicating a long-term demand for Nvidia’s chips. As global companies increasingly adopt AI technology, Nvidia seems well-poised to maintain its dominant market position and capitalize on the AI boom. The optimistic third-quarter revenue forecast of approximately $16 billion further solidifies Nvidia’s status as a market leader and highlights its outstanding financial performance in the face of unprecedented demand.