Nvidia exceeds expectations – share rises more than eight percent

san francisco The chip group Nvidia has continued its triumphal march on the stock exchange. When presenting the quarterly figures, CEO Jensen Huang was able to slightly exceed analysts’ expectations. The company’s shares then rose by more than eight percent in after-hours trading on Thursday night. The company’s stock market value has increased by more than 50 percent since the beginning of this year.

At first glance, the company’s quarterly results didn’t look good. Year-over-year, fourth-quarter revenue fell 21 percent to $6.05 billion. Full-year sales stagnated at $27 billion. However, analysts had expected significantly weaker data.

In addition, Nvidia boss Huang gave a much stronger outlook than initially expected. The US chip manufacturer announced on Wednesday a sales forecast for the current first quarter of 6.5 billion dollars with a margin of two percent. Analysts had expected $6.3 billion.

The reason for the better mood is the high demand for artificial intelligence (AI) applications. Nvidia provides specialized graphics chips that are optimized for AI applications. Nvidia controls about 80 percent of the graphics chip market.

Large corporations like Microsoft and Google are in a race for a dominant position in the AI ​​market. Both companies buy chips from Nvidia for this. Nvidia CEO Huang said that AI is at a “tipping point,” prompting companies of all sizes to buy Nvidia chips to develop AI software.

Warnings against exaggerated market valuation

“The versatility and capability of generative AI has created a sense of urgency among companies around the world to develop and deploy AI strategies,” said Huang. “New companies, new applications, and new solutions to long-standing problems are being invented at a rapid pace.”

However, analyst Glenn O’Donnell of analysis house Forrester warned that Nvidia’s high market valuation could be overstated. “Nvidia is a good company, but not that good,” O’Donnell said. Jensen Huang is an excellent CEO. But Nvidia is not immune to the gloomy economic outlook.

“2023 will be a difficult year for chip companies,” predicted O’Donnell to the Handelsblatt. The analyst suspected that Nvidia would also feel the effects of this situation.

The consulting firm Gartner had actually predicted falling chip sales in 2023 due to the gloomy economic prospects. Nvidia rival Intel warned of a slide into the red for the current quarter. Although AMD posted the lowest growth since 2019 at the end of 2022, it still surprised on the upside.

More: Many large corporations are currently relying on artificial intelligence and its applications. However, the price fluctuations are almost always very high – but there are alternatives.

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