Nvidia beats profit expectations due to demand for artificial intelligence chips

US chip giant Nvidia said on Wednesday it posted a profit of $19 billion on record high revenue last quarter as demand for its hardware to support artificial intelligence continues to rise.

Nvidia reported quarterly sales of $35.1 billion, about $2 billion above market expectations.

“The era of artificial intelligence is well underway, fueling the global shift to Nvidia computing,” said founder and CEO Jensen Huang.

“AI is transforming every industry, company and country.”

Huang said Nvidia’s long-awaited Blackwell processor platform is in full production and the company is seeing “incredible demand” for the new offering as well as current-generation Hopper processors.

“Enterprises are adopting agent-based AI to revolutionize work processes,” Huang said.

“Investment in industrial robotics is growing due to breakthroughs in physical artificial intelligence, and countries have realized the importance of developing their national artificial intelligence and infrastructure.”

Nvidia overtook Apple earlier this month to become the world’s most valuable company as the artificial intelligence boom continues to roil Wall Street.

Following the quarterly report, Nvidia’s share price fell nearly two percent in after-hours trading to $143.24.

Investors may have been concerned about the company’s claims that its margins, the amount of money it makes from refining, are expected to narrow.

“Despite Nvidia’s technology lead with CUDA and its first-mover advantage in AI infrastructure, there is little room for execution errors in 2025,” said Emarketer analyst Jacob Bourne.

“Especially given the uncertainty surrounding Blackwell’s deployment and increasing competition from AMD and key customers’ own chip development efforts.”

The market is also likely to weigh geopolitical factors, such as potential trade turbulence with China following Donald Trump’s return to the White House in January.

Nvidia relies on Taiwanese company TSMC to produce its coveted GPUs.

The world’s biggest tech companies have invested tens of billions of dollars in powerful Nvidia AI chips and software to get their ChatGPT-style AI models up and running.

Microsoft, Google, Meta, Tesla and Amazon all rely on Nvidia technology to train generative AI models and perform the heavy computational tasks required to implement the new technology.

Ahead of the latest earnings, Nvidia’s share price has nearly tripled since the start of the year and accounted for a third of the broad S&P 500’s gains this year.

Source: AFP