Nvidia Embraces Artificial Intelligence’s “Inflection Point” and Promotes Its $600 Billion Market



After CEO Jensen Huang touted the potential of the $600 billion market for AI chips amid what it called an “inflection point” for the world’s fastest-developing technology, Nvidia (NASDAQ:NVDA) shares skyrocketed on Thursday, touching the highest levels in more than a year. Nvidia shares have now reached the highest levels in more than a year.

Nvidia has introduced a new artificial intelligence “supercomputer” called the Nvidia DGX, which will enable commercial clients to gain access to AI-related technology provided by cloud computing service providers such as Microsoft (NASDAQ:MSFT)  and Oracle (ORCL) effectively establishing a new market for “AI-as-a-service” to tens of thousands of businesses all over the world and Oracle (NYSE:ORCL).

This capability to address the new AI investment explosion, which was sparked in part by the unveiling of the ChatGPT chatbot earlier this year, has the potential to place Nvidia in a leadership position within a market that could be worth more than $600 billion.

The management consulting firm Gartner projects that so-called generative artificial intelligence will account for approximately 10% of all data produced by the year 2025, which is a significant increase from the current level of just 1% in 2021. According to projections made by analysts at KGI, this will add between $5 billion and $6 billion to Nvidia’s top-line revenue over the course of the next three years.

“There is no doubt about the fact that the computer industry is currently experiencing a very momentous time. Because it was easier to use, easier to program, and more accessible, every single platform change and every inflection point in the way that people develop computers took place because of these factors “During a conference call with investors late on Wednesday night, Huang told them that the group’s earnings for the fourth quarter were better than expected.

“The rise of personal computers brought about this change. This took place during the revolution brought on by the internet. The same thing took place with mobile cloud “he added. “There is no way to avoid the conclusion that we have entered a brand-new era of computing. As a result, I believe that this (the market estimate of 600 billion dollars) is really even more realizable today and sooner than it was before.”

Nvidia’s stock experienced a 14% increase in value by the close of trading on Thursday, reaching a price of $236.61 per share. This gives the Santa Clara, California-based technology company a market capitalization of approximately $582 billion. Earlier on in today’s trading session, the price of the stock reached a new all-time high of $238.88.

Shares of Oracle were trading higher by 2.7%, reaching $88.67, while shares of competing chipmakers Advanced Micro Devices –  and Micron Technology –  increased by 4.2% and 3.1%, respectively.

In terms of earnings for the fourth quarter, Nvidia reported an adjusted bottom line of 88 cents per share. This figure represented a decrease of 33% from the same period a year earlier but exceeded projections made by Wall Street by approximately 7 cents. The chipmaker reported that revenue came in at $6.05 billion, once again exceeding the estimates of industry analysts thanks to significant growth in its gaming chip business.

Nvidia predicted that its revenue would most likely increase by 7.4% on a sequential basis to $6.5 billion and that its gross margins would expand by 80 basis points (0.8 percentage points) to approximately 64.1% during the current quarter.

Revenue from data centers reached $3.62 billion, an increase of 11% from the same period a year earlier. However, this figure represents a decline of approximately 6% from the previous quarter due to a reduction in cloud spending and the disruptions caused by Covid in China.

The company’s gaming revenue increased by 16% from the previous quarter to $1.83 billion, but it was still down more than 47% from the same period a year earlier. This was in part thanks to the improving demand for its RTX 40 Series GPUs.

Nvidia’s recent agreement with Microsoft, which was established earlier this week, could also result in a longer-term benefit for the company. This agreement would permit Nvidia to stream games such as “Call of Duty” across its GeForce Now service if the company is granted permission to complete its planned $69 billion takeover of Activision (ATVI) –  by regulatory authorities in the United States and Europe. GeForce Now was announced earlier this week.

“Combining the incredibly rich catalog of Xbox first-party games with GeForce NOW’s high-performance streaming capabilities will propel cloud gaming into a mainstream offering that appeals to gamers of all levels of interest and experience,” said Nvidia Senior Vice President Jeff Fisher. “This will propel cloud gaming into a mainstream offering that appeals to gamers of all levels of interest and experience.”

Featured Image: Pexels @ Valentine Tanasovich

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