By Asa Fitch
Nvidia delivered strong quarterly revenue growth and a robust financial outlook, indicating persistent momentum in the nearly two-year-old AI boom despite concerns that investment has surged ahead too quickly.
The AI chip giant on Wednesday said sales in the three months through July more than doubled from a year earlier to $30 billion. Nvidia's profit also more than doubled to $16.6 billion.
Nvidia also projected around $32.5 billion of revenue for its current quarter, topping Wall Street forecasts in a FactSet survey.
However, the company said gross profit margins narrowed in the quarter from the period that ended in April. Chief Financial Officer Colette Kress pinned the blame partly on production issues with its next-generation Blackwell chips that required a design tweak.
Nvidia said production of the chips is set to ramp up in the fiscal fourth quarter that ends in January, which it expects to add several billion dollars of revenue in the period.
Nvidia's stock, which is up sharply this year but has been turbulent in recent months, gyrated in after-hours trading following the results, and was recently down more than 3%. Through Wednesday's close, the shares had gained more than 150% this year alone, pushing its valuation above $3 trillion and making it the second-largest listed company in the world behind Apple.
Nvidia's chips have become the computational workhorses of the AI boom, essential to the creation and deployment of AI systems like OpenAI's ChatGPT. As its sales have surged, its stock has pushed up the broader market and its quarterly earnings reports have become regular tests of the boom's staying power.
Since reporting revenue of $7.2 billion in its April quarter last year, Nvidia has repeatedly blown through Wall Street forecasts and its own guidance, eclipsing $26 billion in sales for the same quarter this year.
Big tech companies' outlays on AI have been driving Nvidia's results. Google parent Alphabet last month said its capital spending would be elevated through the second half of this year, at least $12 billion a quarter. Amazon.com, Microsoft and Meta all have stepped up spending in recent quarters, too, with much of the money going into AI-focused data centers that house Nvidia's chips.
Led since its founding in 1993 by Chief Executive Jensen Huang, Nvidia set the stage for its rise with investments in AI and other forms of computing using chips that it originally developed to enhance computer graphics. For years, most of Nvidia's sales came from graphics chips marketed to videogamers.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
August 28, 2024 16:59 ET (20:59 GMT)
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