Nvidia Corp delivered a surprisingly strong revenue forecast and pushed back on the idea that the AI industry is in a bubble, easing concerns that had spread across the tech sector.
The world’s most valuable company expects sales of about $65 billion in the January quarter — roughly $3 billion more than analysts predicted. It said that in its most recent quarter, its profit was $31.9 billion, up 65 per cent from a year earlier and 245 per cent from the year before that. Nvidia also said that a half-trillion-dollar revenue bonanza due in the coming quarters may be even bigger than anticipated.
The outlook signals that demand remains robust for Nvidia’s artificial intelligence accelerators, the pricey and powerful chips used to develop AI models. Nvidia had faced growing fears in recent weeks that the runaway spending on such equipment wasn’t sustainable.
“There’s been a lot of talk about an AI bubble,” CEO Jensen Huang said on a call with analysts. “From our vantage point, we see something very different.”
The upbeat commentary sent shares up about 5.4 per cent in early trading on Thursday before markets opened in New York. They had gained 39 per cent this year through the close, leaving the company’s market value at $4.5 trillion.
Nvidia’s results have become a barometer for the health of the AI industry, and the news lifted a variety of related stocks.
“Markets are reacting very positively to the news that there is no slack in AI momentum,” Brian Mulberry, senior client portfolio manager at Zacks Investment Management, said in a note.
Huang had said last month that Nvidia has more than $500 billion of revenue coming over the next few quarters, as owners of large data centres will continue to spend on new gear because investments in AI have begun to pay off.