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Nvidia forecast shatters estimates as AI boom stays strong

Shares of Nvidia Corp. soared on Thursday following an impressive sales forecast that reinforced the company's central role in the booming artificial intelligence (AI) industry. The chipmaker, headquartered in Santa Clara, California, projected second-quarter revenue of about $28 billion, surpassing analysts' expectations of $26.8 billion. This announcement came on the heels of a strong first-quarter performance, driven by significant growth in Nvidia’s data-center division.

The company’s stock had already surged 92% this year before Wednesday’s close, fueled by investor optimism about its continued success in the AI sector. Following the earnings report, Nvidia's shares jumped another 9.3% to $1,037.99, adding nearly $220 billion to its market value—an amount exceeding the total market capitalization of rival chipmaker Intel Corp.

Nvidia’s CEO Jensen Huang described the current period as the beginning of a new industrial revolution, highlighting the transformative potential of AI technology. The company also announced a 10-for-1 stock split and a 150% increase in its quarterly dividend to 10 cents per share.

Nvidia’s data-center division, its largest revenue source, generated $22.6 billion last quarter, significantly more than the $21 billion analysts had predicted. The company’s gaming chips brought in $2.6 billion, matching expectations. The robust forecast solidifies Nvidia's position as a key player in AI, with its AI accelerators—chips crucial for developing advanced AI tools—becoming highly sought-after.

Much of Nvidia's new revenue comes from major tech giants like Amazon, Meta, Microsoft, and Google, which together account for about 40% of its sales. However, Huang aims to diversify Nvidia's customer base by expanding into industries such as automotive, biotechnology, and healthcare, as well as into sovereign AI systems for various countries.

Tesla Inc.'s use of Nvidia technology for developing autonomous vehicle software exemplifies this diversification. The release of Nvidia's new Blackwell chip platform, designed for generative AI, marks another step in the company's growth strategy. Demand for Nvidia’s products remains high, and despite supply chain complexities, Huang expects this demand to continue well into the next year.



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