Nvidia continued to experience strong growth in revenue and net income due to the high demand for its artificial intelligence (AI) chips. Despite concerns about trade restrictions, the company reported a 206% increase in revenue year-over-year and a 34% increase from the previous quarter, surpassing estimates for its third quarter of the 2024 fiscal year, with revenue exceeding $18 billion. Net income also rose significantly, with a 49% increase from the previous quarter and a staggering 1,259% increase year-over-year, reaching $9.2 billion.
Jensen Huang, founder and CEO of Nvidia, attributed the company’s growth to the transition from general-purpose to accelerated computing and generative AI. He mentioned that large language model startups, consumer internet companies, and global cloud service providers were among the first to adopt these technologies, and the next waves of adoption are already underway. Huang highlighted that nations, regional cloud service providers, enterprise software companies, and enterprises themselves are investing in AI solutions to meet local demand and automate various industries.
However, Nvidia faces challenges from export controls imposed by the U.S. government. These restrictions require the company to obtain a license from the Commerce Department to sell certain advanced chips to countries like China, Vietnam, and several Middle Eastern nations. While Nvidia plans to introduce new products that comply with these regulations, the export controls are expected to significantly reduce sales to these destinations in the fourth quarter of fiscal 2024. Nevertheless, the company believes that strong growth in other regions will offset this decline.
Nvidia’s stock experienced a slight dip during Tuesday’s trading and fell further in after-hours trading. Despite this decline, the stock has seen a remarkable increase of over 248% in 2023. The earnings call did not address the potential emergence of a new AI chip competitor, which recently gained attention following the departure of OpenAI CEO Sam Altman. Altman was reportedly raising funds in the Middle East for an early-stage AI chip project that could provide a lower-cost alternative to Nvidia’s chips.
Source: Nvidia revenue soars due to AI, but stock dips on trade restrictions
