Nvidia
Nvidia just announced its financial results for the first quarter of the fiscal year 2024 which revealed how the company is winning amidst the boom of the Artificial Intelligence(AI) industry due to the increased demand for powerful hardware to support the AI revolution.

Surging Demand and Stellar Prices

In a press release announcing its earnings, Nvidia reported that it had seen a 19% increase in revenue from the last quarter along with a 44% increase in profits. While revenue was down 13% year over year, decreased costs led to a 26% increase in net income.

Additionally, the company stated that it was expecting $11 billion in sales this quarter with a 2% margin which is more than 50% of what Wall Street had estimated.

As a result of the positive financial results, Nvidia saw a 28% increase in the stock of the California-based corporation during the after-hours trading as its earnings considerably exceeded forecasts the day the announcement was made, marking the biggest increase for the company as well as the US stock market.

The business’s strong performance increased not only its own stock but also those of other AI-related businesses like rival chipmaker Advanced Micro Devices, supporters of generative AI Microsoft and Google, AI software developers C3.ai and Palantir Technologies, and others.

If the increases continue, the company will increase its market capitalization from $755 billion to $219 billion in a single day, smashing Apple’s previous record of $191 billion.

In the statement, the CEO and Founder of the company, Jensen Huang, stated that the business was experiencing “surging demand” for its data center solutions such as GPU chips from cloud vendors and large consumer internet companies, which use Nvidia chips to train and deploy generative AI applications.

“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” he said, adding that “A trillion dollars of installed global data center infrastructure will transition from general-purpose to accelerated computing as companies race to apply generative AI into every product, service, and business process.”

From CPUs to GPUs

GPU
The performance of Nvidia’s data center proves that cloud providers and other businesses that run a lot of servers including bitcoin miners are starting to place more and more importance on the power of AI chips.

“The overwhelmingly positive market reaction” to Nvidia’s news “will incentivize more mining companies to follow suit making announcements of their own and allocating more of their power capacity to other forms of compute,” said Ethan Vera, chief operating officer at mining services firm Luxor Technologies, to CoinDesk.

He however admitted that the repurposing of AI chips for bitcoin mining would not be straightforward due to the difference in infrastructure build. “ Firms will have to hire engineers to plan their sites differently and sales staff to sign up clients,” he said.

According to Huang, Nvidia believes it is riding a notable shift in how computers are being built which may lead to even greater growth, potentially causing the market for data center components to reach $1 trillion.

Since the invention of computers, the most important component has been the CPU whose main producers were Intel rivaled by AMD. However, the expansion of AI has seen GPUs gaining the center stage for there massive computing power, taking Nvidia to the top with them.

In summary, the key question is if Nvidia’s stock prices will stay strong, keeping it the top chipmaker globally. With an additional $50 billion, Nvidia would enter the rare trillion-dollar club, which now only has Apple, Saudi Aramco, Microsoft, Alphabet, and Amazon. Tesla and Meta were part of this club in 2021 but have since fallen out.