NASDAQ value NVIDIA wants to continue to grow: AI boom inspires chip giants

The boom in artificial intelligence continues – and chip manufacturer NVIDIA is also feeling the effects. But could the hype soon end and the further developments of AI be exhausted? NVIDIA has a clear answer to this.

• NVIDIA with strong numbers thanks to the AI ​​boom
• Export restrictions to China problematic?
• Chip giant expects continued strong development

The AI ​​boom continues, but the competition doesn’t sleep either. NVIDIA is considered a pioneer in the development of AI chips and has recorded astonishingly rapid growth. The latest figures were also very strong – NVIDIA recorded a strong jump in sales and profits. Sales of around $18 billion were achieved in the third quarter of this year – an increase of more than 200 percent compared to the previous year. The driver for this was particularly the data center segment. This is responsible for GPUs and chips that are driving the AI ​​boom.

NVIDIA CEO Huang remains confident

In the latest quarterly earnings release, CEO Jensen Huang remained optimistic – he expects further growth in this area at least through 2025, according to MarketWatch. According to him, the change brought about by AI is just beginning. AI training will never be “finished”; the need for more comprehensive, more accurate and more individual AI models will continue to increase. “Our strong growth reflects the industry-wide platform shift to accelerated computing and generative AI,” the Frankfurter Allgemeine Zeitung (FAZ) quoted Huang as saying. And further: “Large language model startups, consumer Internet companies and global cloud service providers were the pioneers. Now the next waves are forming. Countries and regional cloud providers are investing in AI clouds to meet local demand “Enterprise software companies are adding AI co-pilots and assistants to their platforms, and companies are developing custom AI to automate the world’s largest industries,” Huang noted during the earnings call.

Huang was already extremely confident during the telephone conference following the last figures presentation in August. When asked how sustainable the current growth is, the CEO had replied: “There are about a trillion dollars worth of data centers in the world, installed in the cloud, in the enterprise and elsewhere. And these trillions of dollars “Data centers are in the process of transitioning to accelerated computing and generative AI.” And further: “This is not a short-term thing. This is a long-term industry transition.”

Huang with AI visions

NVIDIA CEO Huang’s vision is to create “AI factories.” These would provide the opportunity for companies, governments and infrastructure developers to develop their own AIs – tailored to different needs, according to MarketWatch. The need for additional AI processing would therefore continue to increase, not stagnate or even decrease. “I think we’re at the beginning of an industrial transition – essentially a comprehensive one – to generative AI, to accelerated computing,” Huang said, according to the Financial Times.

As Huang further emphasizes, rapid AI development is also important from a security perspective. “We need to accelerate the development of AI as quickly as possible, and the reason is that security requires technology,” Huang said in an interview with Goldman Sachs Asset Management. “We need a lot more technology like this.”

China restrictions as a problem?

The fact that the export of GPUs to China was recently restricted had a negative impact on the mood and also on NVIDIA’s shares on the day the figures were presented. Sales in the current quarter and calendar year 2024 are expected to “decrease significantly” due to the US sanctions, but are expected to be “more than offset by strong growth in other regions,” as NVIDIA CFO Colette Kress explained during the conference call. NVIDIA is currently working on tailor-made designs of its GPUs for the Chinese market that take the restrictions into account – but this will probably take some time. “We do not expect their contribution to be material or significant,” Kress noted, according to the Financial Times. “It’s a significant process to design and develop these new products. It’s just going to take some time to discuss with our customers their needs and wants for these new products that we have,” Kress continued. NVIDIA will also “ensure that we have detailed discussions with the US government about the new products.”

NVIDIA stock is one of the best performing stocks on Wall Street. So far this year, the stock on the NASDAQ has risen by around 218 percent, most recently to $465.66 (as of closing price on December 5, 2023).

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