Nvidia shares leap as AI trend drives demand for chips

It expects revenue of $11b in current quarter

By AFP - May 26,2023 - Last updated at May 26,2023

The Nvidia headquarters on Thursday in Santa Clara, California. The Dow fell early Thursday, on worries about US debt ceiling talks, but chip maker Nvidia surged more than 20 per cent, lifting its market value close to $1 trillion (AFP photo)

SAN FRANCISCO — Shares in US chip company Nvidia soared more than 25 per cent Wednesday after an earnings report showed the artificial intelligence trend is fueling demand for its sophisticated chips.

Net income for the fiscal quarter that closed at the end of April was $2.04 billion, up 26 per cent from $1.68 billion in the same period a year earlier, Nvidia reported.

More than half of Nvidia's revenue, some $4.28 billion, came from its data center business setting a new record high, according to the chip maker.

"The computer industry is going through two simultaneous transitions — accelerated computing and generative AI," Nvidia founder and chief Jensen Huang said in an earnings release.

"Our entire data centre family of products is in production; we are significantly increasing our supply to meet surging demand for them."

Nvidia specialises in graphics chips that have long been coveted by gamers but have become engines for the kind of complex computing processes involved in artificial intelligence.

"A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process," Huang said.

Gaming-related revenue was down at Nvidia compared to the same quarter a year ago, with the company faulting the overall macroeconomic slowdown.

Nvidia revenue in the recently ended fiscal quarter tallied $7.19 billion, down from the same period last year but up from the prior quarter, the Silicon Valley company reported.

Nvidia said it expected revenue of about $11 billion in the current quarter, which seemed to drive investor enthusiasm for its shares.

Nvidia stock price soared to $387 a share in after-market trading that followed release of the earnings figures.

Release of ChatGPT generative AI by startup OpenAI has triggered a race between Microsoft, Google and others to develop the technology that promises to transform society.

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