During an earnings call on Wednesday, Nvidia CEO Jensen Huang immediately addressed discussions about a potential AI bubble without any prompting. He emphasized that, from his perspective, the situation was different. Huang then proceeded to spend approximately five minutes explaining how Nvidia, currently the most valuable publicly traded company globally, would meet the high customer demand sustainedly. He believes that as AI continues to advance and permeate various industries, from cloud computing to robotics, Nvidia’s chips will play a crucial role.
Despite Huang’s optimistic remarks, reactions from Wall Street were mixed. Following record quarterly sales and Huang’s comments on avoiding a bubble, Nvidia’s shares rose by 5% during after-hours trading on Wednesday. However, this increase was insufficient to offset the recent 10% decline in share value after reaching an all-time high in late October.
Since the introduction of ChatGPT by OpenAI three years ago, Nvidia has experienced significant success with a surge in demand for its GPUs used in training generative AI systems. The company dominates the global GPU market with high demand surpassing supply levels. Nvidia executives confirmed having around $500 billion in backlogged orders.
Utilizing its increased revenue, Nvidia has repurchased shares and invested billions in various AI companies like OpenAI, CoreWeave, and xAI led by Elon Musk. While some investors express concerns about artificial sales growth through partnerships, industry insiders stress the importance of collaborating with Nvidia for chip access and technical support.
Huang defended investments in companies like OpenAI during the call, highlighting deep technical collaboration for mutual growth benefits. He mentioned a recent partnership with Anthropic to integrate their Claude chatbot onto Nvidia chips for the first time. Huang indicated that interest from customers and platforms seeking collaborations continues to rise steadily.
Nvidia’s recent success resulted in sales of $57 billion and nearly $32 billion in profit in the last quarter. The company anticipates achieving $65 billion in sales for the current quarter, surpassing analysts’ $62 billion estimate. Despite doubling annual revenue over the past two fiscal years, Nvidia predicts a growth slowdown to 64% by January when its current fiscal year concludes.
Concerns linger among some investors regarding potential limitations due to power consumption and supply chain issues affecting data center construction and future GPU sales growth for Nvidia. While once driven mainly by gaming chips, about 90% of Nvidia’s current sales derive from its data center business operations.