Nvidia Corp, world’s most valuable chipmaker, projected July-quarter revenue more than 50 percent above the average Wall Street estimate and said it would have more supply of AI chips, which are used to power ChatGPT and many similar services, in the second half to meet a surge in demand.
Nvidia said its sales in the three months ending in July will be about $11 billion. This was against an average analyst estimate of $7.18 billion.
Stellar revenue forecast of the fifth-most valuable US company showed that Wall Street has yet to price in the game-changing potential of artificial intelligence (AI). Stock of the chipmaker surge nearly 25 percent on May 25, in one of the largest single-day gains in value for a US stock, doubling the stock's value for 2023 and increasing the company's market capitalization by about $200 billion to nearly $939 billion.
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The forecast also sparked a rally in the chip sector and for AI-focused firms, lifting stock markets globally. This makes Nvidia twice as big as the second-largest chip firm, Taiwan's TSMC. In the US, it trails only trillion-dollar-value companies Apple Inc, Alphabet Inc, Microsoft Corp and Amazon Inc.
Analysts rushed to raise their price targets on the stock and some analysts said Nvidia's results show that the generative AI boom could be the next big driver of growth.
"In the 15+ years we have been doing this job, we have never seen a guide like the one Nvidia just put up with the second-quarter outlook that was by all accounts cosmological, and which annihilated expectations," Stacy Rasgon of Bernstein said.
(With agency inputs)