(News Bulletin 247) – The graphics processor specialist has delivered its second quarter results as well as its forecasts for the third, smashing analysts’ estimates. Data center revenues jumped 170% year-on-year. On Wall Street, the action jumped.

To say that Nvidia’s quarterly results were expected is an understatement. The American graphics processor specialist is the only “mega-cap” on Wall Street ($1.13 trillion) to publish its accounts this week, in a slack period in terms of news. And after the spectacular surge in its stock (+220% since January 1) expectations were high.

Additionally, Nvidia’s results are an important barometer of demand for generative artificial intelligence (AI), at the heart of chatbots. The group dominates the market for graphics chips essential for generating advanced tasks and applications in artificial intelligence.

Microsoft and Google are thus equipped with thousands or even tens of thousands of Nvidia A100 graphics processors (GPUs) in their data centers to develop and train their conversational robots, ChatGPT and Bard respectively. The increased use of generative AI translates into more computing power requirements, and therefore greater demand for Nvidia’s products.

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Turnover up by…101%

These high expectations, Nvidia has not exceeded them but pulverized. Which obviously delighted Wall Street, the action jumping 6.6% in post-closing trade on Wednesday evening.

If this rise continues this Thursday afternoon in session, the group founded by Jensen Huang (whose fortune is now approaching 50 billion dollars) would add between 60 and 70 billion dollars to its market capitalization, i.e. the equivalent of the weight of Kering or Safran on the stock market.

In the second quarter of its 2023-2024 fiscal year which will end next July, Nvidia saw its revenue stand at $13.51 billion, a jump of 101% year-on-year and 88% compared to in the previous quarter.

The datacenter segment, which therefore reflects the demand for the group’s products related to AI and generative AI, saw its revenues rise to 10.32 billion dollars, reflecting a year-on-year increase of 171%.

“The world has about 1 trillion installed data centers, cloud, enterprise and otherwise,” Jensen Huang said in a conference call with analysts, as quoted by CNBC. “These trillion data centers are transitioning to accelerated computing and generative AI,” he continued. The leader had previously compared the emergence of ChatGPT to that of the iPhone in the second half of the 2000s.

Net income more than tripled year on year to $6.2 billion, as did earnings per share of $2.48.

According to a consensus cited by CNBC, analysts expected “only” $11.2 billion in revenue and earnings per share of $2.09.

The “godfather” of generative AI

But what is most impressive is not so much the results for the second quarter as the forecasts for the third.

Over this period, Nvidia has indicated that it expects to generate revenues of $16 billion, with a margin of error of plus or minus 2%. This would represent an increase of 138% over one year. And to think that a “normal” quarter of Nvidia’s activity was still around 7 billion dollars a few months ago…

The market expected much less, since the consensus was at 12.6 billion dollars for this third quarter.

“Our demand visibility extends into next year. Over the coming quarters, our supply will continue to grow as we reduce cycle times and work with our supplier partners to increase capacity. “, said Nvidia’s chief financial officer, Collette Kress, quoted on X (ex-Twitter) by CNBC journalist Kristina Partsinevelos.

“(Nvidia’s) outlook will go around the world, what we saw tonight (when the band released) is historic,” exclaimed on the Dan Ives television channeltech sector analyst for Wedbush.

“There is a gold rush for generative AI and this is just the beginning,” he continued. And Nvidia teams “are the godfather of AI”, added the analyst.