Shares of chip designer Nvidia soared in after-hours trading Wednesday after the company projected higher-than-expected sales, banking on huge demand for its industry-leading artificial intelligence chips.
Nvidia’s fourth-quarter revenue exceeded expectations by 7%. However, for the first three quarters of 2023, Nvidia was reporting quarterly revenue that was 10% to 20% higher than analysts expected.
The company expects sales for the current quarter to be $24 billion, plus or minus 2%. Analysts’ average sales estimate was $22.17 billion, according to LSEG data.
Shares of the Santa Clara, California-based company rose more than 9% to $741 in volatile after-hours trading.
Nvidia’s stock has risen more than 30% so far this year, putting it in contention with Amazon and Alphabet to be the most valuable company.
As of February 20, an average of about $30 billion worth of Nvidia shares had been traded each day over the past 30 sessions, outpacing electric car maker Tesla, which averaged $22 billion per day over the same period.
Revenue in the data center sector, the largest by share of revenue, rose 409% to $18.4 billion in the fiscal fourth quarter, beating expectations of $16.8 billion, according to LSEG data. Last quarter’s data center revenue increased by nearly 280%.
As companies rush to expand their AI offerings, the already huge demand for the company’s data center chips and graphics processing units (GPUs) continues to grow. Nvidia’s silicon dominates the global market for his AI chips, and customers include his Microsoft.
The AI frontrunner’s supply chain, which has been unable to keep up with the surge in demand for Nvidia’s chips, is also improving.
Analysts expect key supplier Taiwan Semiconductor Manufacturing’s advanced packaging capabilities to improve in the first half of this year. This will allow Nvidia to overcome central bottlenecks and deliver more chips to customers.
The AI powerhouse’s revenue continues to grow despite tightening trade restrictions with China, one of its largest markets.
Nvidia reported fourth-quarter revenue of $22.1 billion, beating expectations of $20.62 billion. Fourth-quarter earnings, adjusted for certain items, came to $5.16 per share, compared to expectations of $4.64, according to LSEG data.
Nvidia expects first-quarter adjusted gross margin to be 77% plus or minus 50 basis points. Analysts’ average expected gross profit margin is 75.6%.
