Nvidia's Q3 revenue forecast exceeds expectations

Santa Clara-based chip designer Nvidia has surpassed Wall Street’s Q3 revenue expectations, capitalizing on the soaring demand for its chips that drive major artificial intelligence applications globally. The company’s shares jumped by 8 percent after the bell, reaching a record high.

Nvidia’s robust Q3 forecast, announced on Wednesday, has outperformed predictions by a considerable margin, revealing that the surge in generative AI technologies, largely reliant on Nvidia’s chips, continues its rapid momentum.

The company’s commitment to repurchasing an additional $25 billion worth of its shares comes as its shares have already tripled in value this year, propelling Nvidia into the realm of trillion-dollar chip giants. Investors are positioning Nvidia as the primary beneficiary of the ongoing AI boom.

Industry experts estimate that the demand for Nvidia’s premium AI chips is surpassing supply by over 50 percent, a disparity that is projected to persist for several quarters. Nvidia’s CEO, Jensen Huang, noted the global shift towards accelerated computing and generative AI as the driving force behind this demand surge.

Nvidia’s impressive report also triggered a surge in the stock prices of other major tech players and AI-focused companies. In extended trading on Wednesday, Microsoft, Meta Platforms, and Palantir Technologies experienced increases of 2.4 percent, 1.2 percent, and 4.2 percent respectively.

“Notably, China’s voracious demand for Nvidia chips has contributed significantly to this phenomenon, driven by companies rushing to stockpile chips ahead of potential US export restrictions”.

“The company’s Q3 revenue is anticipated to be approximately $16 billion, with minor fluctuations. Analysts polled by Refinitiv had an average estimate of $12.61 billion. In the second quarter, adjusted revenue reached $13.51 billion, far surpassing the projected $11.22 billion”.

“Nvidia’s data center business demonstrated remarkable growth, with a 141 percent increase in revenue to $10.32 billion in the quarter ending on July 30th. This exceeded analyst projections by over $2 billion, highlighting Nvidia’s exceptional position in capitalizing on AI advancements”.

“Analysts emphasized that Nvidia’s firm grip on the AI momentum is evident, and while competition from Advanced Micro Devices is anticipated, Nvidia’s leadership in software, particularly its long-standing edge in CUDA technology, remains unshaken”.

In an industry where PC and data center chip sales have wavered, AI-related chips have emerged as a beacon of growth. Nvidia’s strategic moves to address supply chain challenges and amplify production are essential in sustaining this momentum and capitalizing on the immense demand for AI-driven solutions.