Opinion: Nvidia’s stunning revenue forecast may not be at its peak

Nvidia Corp. surprised. Wall Street announced its stunning forecast Wednesday of $16 billion in revenue for the current quarter, and it may not even be the company’s peak, as its decades of work in accelerated computing pay off in a big way.

The company has shattered expectations with its latest results, thanks to the craze around artificial intelligence, which has driven demand for Nvidia hardware.

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Data center chips that help run AI applications. But what really pleased Wall Street was Nvidia’s prediction of $16 billion in revenue by the middle of the current quarter, a staggering prediction that the company is riding on a wave that shows no signs of abating.

Quarterly revenue of $16 billion would be nearly twice what the company’s all-time high was prior to Wednesday’s report, and even more surprisingly, Nvidia could have the potential to cross the $16 billion mark in the future.

When asked if her revenue guidance represented a peak for Nvidia, CFO Colette Kress said only that the company was seeing “tremendous demand” and had a vision of very strong orders through 2024.

“Going into fiscal 2024, we already have demand visibility…which takes us into the new calendar year as well,” Chris told MarketWatch in an interview. “We have tremendous demand and will continue to increase our supplies next year.”

To put the enormity of Nvidia’s expectations into perspective, total revenue for the full year that ended in January was $27 billion, and the company forecasts it could make more than half that amount in the current quarter alone.

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As companies become serious about using AI to make themselves more efficient or to increase their own product offerings, they are now re-engineering their data centers using accelerated computing to process the vast amounts of data needed to train the large language models that make up AI applications. Accelerated computing also aids in inference, which infers answers based on existing data.

“We knew this day would come at a time when accelerated computing and AI would become extremely important to all kinds of organizations, and that day has come,” said Chris. When asked if the company was nervous at all about looming competition from Intel Corp.

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Advanced Micro Devices Corporation

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Qualcomm Corporation

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And a bunch of chip startups, Chris pointed out, weren’t.

“When we look at the history and how long it took us to get to this point and the complexity it took to get a comprehensive data center solution for AI, we need decades,” she said. “Decades of work, decades of architecture and decades of complexity.”

In other words: “It’s not something anyone can repeat very easily.”

Read also: Nvidia makes a lot of money from AI, so it doesn’t count on the rest of the technology to follow suit.

However, Wall Street is trying to figure out how long this growth can be sustainable, since at some point companies will have all the chips they need to refurbish and modernize their data centers, and hyper-scalable clients like Meta Platforms Inc.

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and cloud services such as Microsoft Corp

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Google Cloud will stop spending at some point.

CEO Jensen Huang said on the earnings call that there’s roughly a trillion dollars in data center spending and maybe a quarter of a trillion dollars in capital spending each year.

“We’re seeing data centers around the world take this capital expenditure and focus it on the two most important computing trends today: accelerated computing and generative AI,” he said. “And so I think… it’s not a near-term thing. This is a long-term shift in the industry, and we’re seeing both of those platform shifts happening at the same time.

With Nvidia shares already up 222% so far this year and set to rise in Thursday’s session, investors will be banking on this comment for some time to come.

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