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Nvidia stock on big run, rides on the tide of demand for AI chips

Nvidia stock on big run, rides on the tide of demand for AI chips
Nvidia expects to report about $7.4 billion in the current quarter, ending in January.

Technology

Nvidia stock on big run, rides on the tide of demand for AI chips

Nvidia, graphics chips major, recorded 5% growth in extended trading after it reported earnings on Wednesday for its third fiscal quarter. The company expects to report about $7.4 billion in the current quarter, ending in January. This would be higher than what the analysts expect – $6.86 billion.




Colette Kress, Nvidia CFO, wrote that the growth was driven by GPU sales to hyperscale customers (an industry term that means cloud providers such as Amazon AWS, Microsoft Azure and Google Cloud). Kress said customers are using the chips for tasks such as understanding human speech and crunching data to offer customer recommendations.

Nvidia has witnessed growing demand for its hard-to-find GeForce graphics cards that are popular with gamers. Gaming, Nvidia’s biggest market, reported $3.2 billion in sales up 42% from $2.27 billion in the same quarter last year. The company attributed the rise in sales to its GeForce consumer graphics processors, however its supply remains limited. Reports state that Nvidia’s gaming graphics cards have software that prevents them from being used for cryptocurrency mining. Nvidia introduced dedicated graphics cards for crypto mining earlier this year to help meet some of the demand; it sold $105 million in cryptocurrency-specific graphics cards, down from $266 million in the quarter ending in August.

Jensen Huang, CEO and Co-Founder, Nvidia, said his company has been able to secure supplies of its chips from its contract manufacturer, but the global supply chain situation is a wake-up call. “We have a secured guaranteed supply, very large amounts of it, quite a spectacular amount of it, from the world’s leading foundry and substrate and packaging, and testing companies that are an integral usual part of our supply chain,” he said. “So we have done that and feel very good about our supply situation, particularly starting the second half of this year and going forward.” Huang said the company’s GTC event was their most successful yet, highlighting diverse applications, including supply chain logistics, cyber security, natural language processing, quantum computing research, robotics, self-driving cars, climate science and digital biology.


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Moreover, the company has made significant gains in data centers, where cloud providers and big enterprises are turning to the kind of graphics processors made by Nvidia for artificial intelligence (AI) applications. Nvidia’s other major business involves selling graphics processing units to data centers, where they’re used to run cloud computing and AI workloads. Nvidia’s Data Center business saw sales rise by 55%, to $2.9 billion in the quarter.

The other parts of Nvidia’s business are much smaller, but the Professional Visualization segment deserves highlighting nonetheless, with sales there up 144% year-over-year, to $577 million. The segment sells high-end GPUs for powerful laptop workstations used in professional design and other industries.


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