Nvidia’s CEO, Jensen Huang, is set to deliver a keynote speech at the upcoming Computex 2023 event in Taiwan. Despite this, Huang is already riding high from the resurgence in AI demand due to the popularity of generative AI such as OpenAI’s ChatGPT. Huang reported earnings on Wednesday that beat Wall Street’s expectations for revenues and the second half of the year. This, in turn, fueled a broad tech rally on Wall Street.
Nvidia’s Strong Q1 Performance
Nvidia, the AI and graphics chip company, saw its stock price rise by 27% in the past couple of days, from $305 a share to $389.25 today, with a market cap of $963 billion, bringing its valuation closer to $1 trillion. Nvidia reported revenues of $7.19 billion for the first fiscal quarter ended April 30, down 13% from a year ago but above expectations. Data center revenue in the first fiscal quarter was a record $4.28 billion, up 14% from a year ago and up 18% from the previous quarter.
In an interview after the earnings announcement, Huang expressed his confidence in the AI surge and Nvidia’s ability to meet the increasing demand. He noted that gaming, while down from a year ago, is back to quarterly growth from previous quarters.
Nvidia’s AI Phenomenon
Huang believes that the surge in demand is an AI phenomenon, rather than an economic revival. Huang explained that the rest of the data center and enterprise computing are muted, but generative AI is thriving. Huang believes that people can now see how they will make money with generative AI as all the APIs can be connected to various services and applications. It has become easier to invest in AI when there is a clear return on investment. Huang also pointed out that people have realized that accelerated computing saves them money and power.
When asked why large language models are so expensive to train, Huang explained that they are not expensive. The cost depends on where you start. Developing a large language model is like taping out a chip, which is a few billion dollars for chip companies. Huang said that the shortages for services are severe at the moment, but it will improve tremendously in just a few months, as all the systems are delivering in real-time.
Despite the yearly comparisons being tough, Huang is excited about the quarterly results of the gaming sector, and the channel inventory correction is now behind them. Nvidia is ramping Ada across the board, and there is a new application for creatives called generative AI. GeForce is for gamers and creatives, and now there is generative AI to help create things. The buzz around generative AI has people excited.
Nvidia’s revenue beat Wall Street’s expectations due to the AI demand surge, especially in generative AI. While the rest of the data center and enterprise computing remain muted, generative AI is thriving. Nvidia’s stock price rose by 27%, and its market cap is closing in on $1 trillion. The shortages for services are severe, but Huang believes that it will improve tremendously in just a few months. The gaming sector is softer than a year ago, but it is back to quarterly growth from previous quarters. Nvidia is ramping Ada across the board, and there is a new application for creatives called generative AI. The buzz around generative AI has people excited.
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