Nvidia's strong growth projection for the first quarter on Wednesday indicated continuing strong demand for its artificial intelligence chips, with the company praising the orders for its new Blackwell semiconductors as "amazing."
The company's forecast helped dispel concerns about a slowdown in hardware spending that arose last month when a Chinese AI startup revealed AI models competing with Western counterparts at a much lower cost.
After rising, Nvidia's shares dipped slightly in volatile after-hours trading following a 3.7% increase in regular trading. Nvidia stands as a major beneficiary of the uptrend in AI-related stocks, with its shares having surged over 400% in the past two years.
CEO Jensen Huang expressed optimism: "AI is advancing at light speed," highlighting the exceptional demand for Blackwell. His remarks should have a positive impact on stocks that recently experienced a downturn.
Huang stated, "We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter."
Nvidia is in the midst of a crucial transition as it moves towards Blackwell, transitioning from selling individual chips to complete AI computing systems incorporating graphic chips, processors, and networking equipment.
In the fourth quarter, the company generated $11 billion in revenue from Blackwell-related products, accounting for around 50% of the total data center revenue.
For the first quarter, Nvidia expects total revenue of $43 billion, slightly below expectations, with a gross margin projection of 71%, compared to the 72.2% forecast. The company aims to return to a mid-70% gross margin range later in the fiscal year as production of Blackwell chips increases, lowering costs.
Despite challenges with the Blackwell rollout impacting margins, the company remains optimistic. Its adjusted per-share profit stood at 89 cents, exceeding estimates, with fourth-quarter revenue climbing 78% to $39.3 billion, surpassing expectations. Sales in the data-center segment, which is a significant revenue driver, surged by 93% to $35.6 billion in the quarter ended January 26.