(Bloomberg) — Nvidia Corp., the chipmaker at the center of the artificial intelligence boom, again issued a bullish sales forecast, showing spending on AI computing remains strong.
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Second-quarter revenue will be about $28 billion, the company said Wednesday. Analysts had forecast an average of $26.8 billion, according to Bloomberg data. Results in the first fiscal quarter, which ran through April, were also better than expected.
“The next industrial revolution has begun,” CEO Jensen Huang said in a statement, repeating one of his favorite themes. “AI will deliver significant productivity gains for almost every sector, helping companies become more cost and energy efficient while increasing revenue opportunities.”
The optimistic outlook reinforces Nvidia’s status as the biggest beneficiary of AI spending. The company’s so-called AI accelerators — chips that help data centers develop chatbots and other advanced tools — have become a hot commodity in the past two years, driving revenue soaring. Nvidia’s market valuation has also skyrocketed, topping $2.3 trillion.
Shares rose about 4% in extended trading on Wednesday. This year, they had already posted a 92% gain at the close, fueled by investor hopes that the company would continue to subvert expectations.
The Santa Clara, California-based company also announced a 10-for-1 stock split and increased its quarterly dividend by 150% to 10 cents per share.
Nvidia, co-founded by Huang in 1993, started out as a supplier of graphics cards for computer gamers. His recognition that the company’s chips were well suited for developing artificial intelligence software helped him open a new market – and gave him a competitive edge.
The release of OpenAI’s ChatGPT in 2022 then sparked a race among major tech companies to build their own AI infrastructure. The battle made Nvidia’s H100 accelerators a must-have product. They sell for tens of thousands of dollars per chip and are often in short supply.
But much of this new revenue comes from a small handful of customers. A group of four companies – Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Google from Alphabet Inc. – are Nvidia’s biggest buyers, accounting for about 40% of revenue. Huang, 61, is trying to spread his stakes by producing complete computers, software and services – aimed at helping more companies and government agencies deploy their own AI systems.
In the first fiscal quarter, Nvidia’s revenue more than tripled to $26 billion. Excluding certain items, earnings were $6.12 per share. Analysts had forecast revenue of about $24.7 billion and earnings of $5.65 per share.
Nvidia’s data center division – now by far its largest revenue generator – generated $22.6 billion in revenue. Gaming chips generated $2.6 billion. Analysts had set targets of $21 billion for the data center unit and $2.6 billion for gaming.
Nvidia emphasized Wednesday that it wants to sell its technology to a broader market, going beyond the giant cloud computing providers known as hyperscalers. Huang said AI is moving into consumer internet companies, automakers and healthcare customers. Countries are also developing their own systems – a trend called sovereign AI.
These opportunities create “multiple multi-billion dollar vertical markets” beyond cloud service providers, he said.
Still, hyperscalers remained a crucial growth driver for Nvidia last quarter. They generated approximately 45% of the company’s data center revenue. That suggests Nvidia is in the early stages of diversifying the business.
The company’s new chip platform, called Blackwell, is now in full production, Huang said. And it lays the foundation for generative AI that can process trillions of parameters. “We are ready for our next wave of growth,” he said.
(Updates with more from the report in the last four paragraphs.)
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