Semafor Signals
Nvidia reports 600% profit increase as AI good times roll
Insights from The Financial Times, Bloomberg, and Wired
The News
Chip maker Nvidia beat analyst expectations by reporting bumper fiscal first-quarter earnings on Wednesday, with sales of more than $26 billion over the three month period ending in April and net profit of $14.9 billion. That’s a profit increase of more than 600% and a revenue increase of more than 200% compared to the same period last year.
With Nvidia reporting its third straight quarter of growth in excess of 200%, it is a sure sign that the boom in artificial intelligence is only going to get bigger. The chipmaker has seen sales in its high-end chips, known as graphic processing units or GPUs, skyrocket as big tech companies and new AI startups compete to make more powerful models.
Expected revenue for this quarter is about $28 billion, also beating expectations. The company also announced a ten-for-one forward stock split beginning in June, an effort to make it easier to buy stock and increase liquidity.
SIGNALS
As goes Nvidia, so goes the market
“It’s Nvidia’s market, we’re all just trading in it,” one analyst told the Financial Times. The company is so massive — and its stock so volatile — that its earnings reports can move markets. The chipmaker “almost single-handedly lifted the American stock market from its 2022 doldrums to today’s record levels,” according to Forbes. Meanwhile, JP Morgan analysts ranked Nvidia missing an earnings target as among the top three events that could make the US stock market dip dramatically, the Financial Times reported.
Nvidia is powering the AI revolution
Nvidia has a “tight grip on the most impactful—and controversial—tech of this era,” Wired reported — analysts estimate it controls about 80% of the GPU market. In the AI age, or “the next industrial revolution,” as Nvidia’s CEO Jensen Huang likes to call it, the company has become indispensable for supplying big corporations with its so-called “AI accelerators.” The 2022 release of OpenAI’s ChatGPT propelled the AI arms race to new intensity, and Nvidia was aptly positioned to cash in on the wave: The company started as a lead supplier of chips for desktop games, setting it up for a quick pivot to the AI data center market, which now dominates its business.
