Dive Brief:

• Chipmaker NVIDIA reported record revenue of $13.51 billion for its second quarter of fiscal 2024, up 88% from the previous quarter and a 101% jump year-over-year, according to its earnings report released Wednesday.
• The results — which come as the demand for and some would say frenzy over generative AI technology continues to rise — follow a less frothy first quarter in which the company reported revenue was down 13% year-over-year but rose 19% from the previous period to $7.19 billion,
• There is “tremendous demand for NVIDIA accelerated computing and AI platforms,” CFO Colette Kress said Wednesday during the company’s earnings call, with major companies — including Amazon Web Services, Microsoft Azure, and Oracle Cloud — already deploying “in volume” systems which use the company’s chips.

Dive Insight:

The Santa Clara, California-based company’s revenue shattered Wall Street expectations of $11.04 billion, and comes as “a new computing era has begun,” founder and CEO Jensen Huang said in a statement included in the release. “The race is on to adopt generative AI,” he said.

The hype around generative AI technology’s potential has not slowed down since the launch of OpenAI’s ChatGPT tool in November, with a report last week from Gartner showing that the technology is at the “peak of inflated expectations” especially when it comes to revenue and sales.

Chipmakers including NVIDIA and Broadcom have moved swiftly to dominate the nascent generative AI space, with Broadcom anticipating revenues generated by the technology will account for over 25% of semiconductor revenue in fiscal 2024, CFO Dive reported in June.

NVIDIA, meanwhile, has been investing in AI for over a decade, Malcolm DeMayo, global VP, financial services industry for the chipmaker told CFO Dive in a previous interview — and the dawn of ChatGPT, which was trained on NVIDIA chips, has pushed the company’s market capitalization to over $1 trillion.

The company’s strong results over the past several quarters has since turned it into a bellwether for generative AI demand, with the technology driving “exponential growth” in the computing space, Kress said in May during the company’s first quarter earnings results.  

Its second quarter revenue spike has only solidified its position as a key player in the nascent generative AI space, with CFRA Research Senior Equity Analyst Angelo Zino noting that NVIDIA “is probably going to be the most important company to civilization over, we think, the next five to 10 years” in an interview Wednesday with Yahoo Finance Live.

NVIDIA also reported record revenue for its data center sector of $10.32 billion for the quarter ended July 30, an increase of 141% from the previous quarter and a 171% rise year-over-year.

Demand for its data center offerings was particularly high in the U.S. for the company’s second quarter, “as customers direct their capital investments to AI and accelerated computing,” Kress said, who also cited steady demand in China with data center revenue falling in the company’s historical range for the quarter.

However, Kress also warned against the long-term effects of potential restrictions that have been floated by the U.S. government regarding the same of the company’s chips in China. The Biden administration is considering new restrictions on the export of AI chips to China, which could halt the ability of customers in the country and others to buy them without a license, the Wall Street Journal reported in June.

The company expects to see revenue climb to approximately $16 billion in the third quarter of fiscal 2024.