NVIDIA, the world's most valuable company, once again issued an optimistic quarterly revenue outlook, indicating that large-scale artificial intelligence (AI) computing power construction is still progressing as planned. The chipmaker said in a statement Wednesday that fiscal first-quarter revenue is expected to be about $78 billion. Wall Street analysts' average estimate was $72.8 billion, according to data compiled by Bloomberg.
"Our customers are rushing to invest in AI computing - these factories are powering the AI industry revolution and its future growth," CEO Jensen Huang said in a statement.
On Wednesday, Nvidia reported better-than-expected financial results, and CEO Jensen Huang said customers were "racing" to invest in AI computing.
This outlook helps ease market concerns about an AI investment bubble. Huang has repeatedly downplayed concerns that the surge in spending on artificial intelligence hardware is unsustainable. He believes it will take years to replace the world's aging computer equipment with machines that will significantly increase productivity.
But some investors had grown tired of the optimism and sold stocks such as Nvidia. Wednesday's earnings report provided some evidence that recent concerns may be overblown. Nvidia ranks among the ten worst-performing chip stocks this year. After the announcement, its stock price rose about 4% after hours.
In the fourth fiscal quarter ended January 25, Nvidia’s revenue increased 73% year-on-year to $68.1 billion. Excluding some items, earnings per share were $1.62. Analysts had expected revenue of $65.9 billion and earnings per share of $1.53.
The adjusted gross profit margin was 75.2%, which was also slightly higher than market expectations.
A major concern facing the technology industry is the shortage of memory chips. Like most electronics manufacturers, Nvidia relies on a steady supply of these components for its products. Supply-side constraints have pushed up memory chip prices, making shipments more difficult this year.
Nvidia, headquartered in Santa Clara, California, said in its earnings report that it has sufficient supply. "We have strategically locked in inventory and capacity to meet demand beyond the next few quarters," the company said.
The data center segment, which is responsible for its industry-leading AI accelerator and networking products, reported fiscal fourth-quarter revenue of $62.3 billion, above the average analyst estimate of $60.4 billion.
Other business performance was relatively poor. Sales of the gaming business were $3.73 billion in the quarter, missing analysts’ average estimate of $4.01 billion. Auto-related business sales of $604 million were also below Wall Street expectations of $643 million.