Chipmaker Nvidia beat market expectations with its second-quarter results and surprised analysts and investors with its guidance for the current quarter. Shares of Nvidia on the Frankfurt Stock Exchange jumped 8.6 per cent on Thursday after the company forecasted quarterly revenue that beat expectations and announced a $25 billion buyback.
As reported by CNBC, Nvidia’s revenue for the quarter ending July 30 stood at $13.51 billion versus $11.22 billion expected by Refinitiv. Net income jumped to $6.19 billion, or $2.48 a share, from $656 million, or 26 cents, a year earlier.
The CNBC report further added that “Nvidia expects fiscal third-quarter revenue of about $16 billion, higher than the $12.61 billion forecast by Refinitiv. Nvidia’s guidance suggests sales in the current quarter will grow 170 per cent from the year-earlier period.”
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Besides, Nvidia said its board of directors authorized $25 billion in share buybacks after the company purchased $3.28 billion in shares during the quarter, the CNBC report added.
Nvidia’s results show growing interest of investors in artificial intelligence (AI) which started with the arrival of OpenAI’s ChatGPT language-generation tool. AI is growing rapidly and many companies now see AI as critical to their future growth.
Nvidia’s strong quarterly sales numbers and guidance point out the significance of the company’s graphics processing units (GPUs) for the generative AI boom. As per CNBC, “Nvidia’s A100 and H100 AI chips are needed to build and run AI applications like OpenAI’s ChatGPT and other services that take simple text queries and respond with conversational answers or images.”
The CNBC report highlighted that Nvidia’s data centre business, which includes AI chips, drove its stellar performance as large consumer internet companies and cloud service providers, including Alphabet, Amazon and Meta grabbed next-generation processors. The company reported $10.32 billion in revenue for the group, up 171 per cent year over year and above the $8.03 billion estimate, according to StreetAccount.
Nvidia’s shares are the top performer in the S&P 500 index as they have more than tripled for the year.