NVIDIA triples sales due to continued AI chip boom!

NVIDIA's third-quarter financial results exceeded Wall Street's predictions, but the stock price fell 1%. The company said there will be a negative impact in the next quarter as export restrictions are affecting sales to organizations in China and other countries.

Colette Kress, who is responsible for finance at NVIDIA, stated in a letter addressed to shareholders, “We expect sales to these regions to drop drastically in the fourth quarter of fiscal 2024, but we believe this decline will be offset by strong growth in other regions.”

In a conference call with analysts, Kress said NVIDIA is working with some customers in the Middle East and China to obtain US government licenses to sell high-performance products. NVIDIA is looking to develop new data center products that are in line with government policies and do not require a license, but Kress said they don't think they will make sense in the fourth quarter.

Below is a comparison with analysts' consensus:

interests: $4.02 per share after adjustment; forecast $3.37

turnover: $18.12 billion Expected: $16.18 billion

Sales for the quarter ended October 29 increased 206% from the same period last year. Net profit was 9.24 billion dollars (3.71 dollars per share), which was higher than 680 million dollars (27 cents per share) in the same period last year.

The company's data center sales were $14.51 billion, up 279%, and surpassed the consensus of $12.97 billion. Half of data center revenue comes from cloud infrastructure providers such as Amazon. Others are due to internet operators and large companies.

Mr. Kress said in a conference call that there was healthy uptake from the cloud, which specializes in lending GPUs to customers.

The game division's revenue was $2.86 billion, an increase of 81%, exceeding the consensus of $2.68 billion.

NVIDIA's fourth quarter sales were set at 20 billion dollars. This231%It means close earnings growth.

During the fourth quarter, NVIDIA announced the GH200 GPU. This GPU has more memory than the current H100, and is additionally equipped with an Arm processor. The H100 is expensive and in demand. According to NVIDIA, Australia's Iris Energy, which owns a Bitcoin mining data center, purchased 248 H100 units for 10 million dollars (about 40,000 dollars per unit).

Also, Mr. Kress stated in a conference call that NVIDIA was planning to introduce computing instances based on GH GPUs to Oracle's cloud soon.

Until about 2 years ago, sales of GPUs for playing video games on PCs were NVIDIA's biggest source of revenue. Currently, the company derives most of its revenue from implementation within server farms.

Since the start-up company OpenAI supported by Microsoft announced the ChatGPT chatbot in 2022, many companies began searching for ways to add similar artificial intelligence functions to their software. As a result, demand for NVIDIA GPUs increased.

NVIDIA is facing obstacles such as competition with AMD and declining profits due to export restrictions that restrict GPU sales in China. Ahead of Tuesday's report, some analysts were optimistic.

Analysts are recommending a “strong buy” for NVIDIA shares. There are no excessive concerns about competition, and it seems that NVIDIA anticipated that Gen AI accelerators would maintain a market share of 85% or more in 2024.

NVIDIA is still working on plans to further expand supply.

Excluding movements outside of hours, NVIDIA's stock price has risen 241% so far this year, greatly exceeding the S&P 500 index, which rose 18% during the same period.