Nvidia continued to soar despite surging demand for the artificial intelligence (AI) chips it designs, reporting significant increases in revenue and net profit – although its shares fell after hours on concerns about trading restrictions.
The AI giant saw its revenue increase 206% year-over-year and 34% from the previous quarter to more than $18 billion, beating estimates of $16 billion for the third quarter of its fiscal 2024. Its net income increased 49% from the previous quarter and 1,259% year-over-year to $9.2 billion.
“Our strong growth reflects the broad industry platform’s transition from general-purpose computing to accelerated computing and generative AI,” said Jensen Huang, founder and CEO of Nvidia. “Large language model startups, consumer internet companies, and global cloud service providers were the first to jump in, and the next waves are starting to form.”
“Countries and regional CSPs are investing in AI clouds to meet local demand, enterprise software companies are adding AI co-pilots and assistants to their platforms, and enterprises are creating personalized AI to automate the world’s largest industries,” he added. “Nvidia AI GPUs, CPUs, Networks, AI Foundry, and enterprise software are all growth engines at full throttle. The era of generative AI is taking off.”
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One of the obstacles Nvidia faces is the US government’s decision export controls. Restrictions announced this year by the Biden administration on advanced chip exports to China and other countries of concern could hurt Nvidia’s business once they take effect.
Export controls require the company to obtain a license from the Department of Commerce to sell certain products. advanced chips to ChinaVietnam and several Middle Eastern countries – which the company says include, but are not limited to, Saudi Arabia and the United Arab Emirates, and exclude Israel.
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Colette Kress, Nvidia’s chief financial officer, said the company plans to introduce products that comply with export controls in the coming months, but noted that about a quarter of the company’s sales in its hub segment data, which generated $14.5 billion in revenue in the third quarter, comes from countries covered by export controls.
“We expect our sales to these destinations to decline significantly in the fourth quarter of fiscal 2024, although we believe this decline will be more than offset by strong growth in other regions,” she said.
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Nvidia stock was down 0.92% during Tuesday’s session and down about 1.4% in the after-hours. Despite Tuesday’s decline, Nvidia stock is up more than 248% in 2023 to date.
While the AI industry has been disrupted by the recent ouster of OpenAI CEO Sam Altman, the potential emergence of a new AI chip competitor was not discussed during the call for comments. Nvidia results.
Before his dismissal, Altman was raising money in the Middle East to finance an early development project. AI chip projectcodenamed Tigris, according to a Bloomberg report.
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Altman’s AI chip project would aim to provide a lower-cost alternative to Nvidia’s chips, potentially challenging its status as a market leader in making the chips and processors needed to power large language models. Other tech companies, including OpenAI, have also considered making their own chips.