Nvidia Surges After AI Computing Push Drives Upbeat Outlook

Nvidia Corp, a tech company based in Santa Clara, California, saw a 13% rise in its stock value in early New York trading on Thursday after giving a positive revenue outlook for the current quarter. The outlook suggests that the company's push into artificial intelligence (AI) processors is helping to offset the sluggish demand for personal computer chips. Nvidia's foray into AI computing chips under the leadership of its Chief Executive Officer and co-founder Jensen Huang is paying off, as the company has parlayed its dominance of graphics processors into a strong position in the growing market for AI hardware. Its chips excel at parallel processing, which allows computers to make sense of large amounts of data and train software to make decisions. Nvidia's announcement of its own AI cloud service and partnership with Oracle Corp., Microsoft Corp., and Alphabet Inc.’s Google to offer the ability to use Nvidia GTX machines to do AI processing via simple browser access is a strategic move. The new platform will help companies that don’t have the technical expertise to build their own infrastructure. Huang said in an interview that the interest in ChatGPT has opened the eyes of business leaders to the power of AI, but the real value will come from tailoring it to companies’ own needs so they can improve their services and products. The positive revenue outlook signals that Nvidia's involvement in the AI space now puts it directly under the spotlight. Russ Mould, investment director at AJ Bell, noted that "when you have 'the next big thing' in tech, it's natural for investors to scramble to find ways to play the theme." If the gain holds, Nvidia would be on track to add about $64.3 billion in market value, taking its year-to-date gains to about $214 billion. Investors have piled into Nvidia, making it the world’s most valuable chipmaker again, as they bet that demand for AI systems such as ChatGPT will boost orders for the company's products. While Nvidia's dependence on the PC market for a large chunk of sales still dragged on its results last quarter, the impact was not as much as feared. The company's gaming business, heavily reliant on the PC industry, had revenue of $1.83 billion last quarter, a decline of 46%. However, it topped the average estimate of $1.6 billion. Data-center sales grew 11% to $3.62 billion, coming in short of an average prediction of $3.86 billion. Overall revenue fell 21% to $6.05 billion, marking Nvidia's second decline in 13 quarters. Profit was 88 cents a share, minus certain items. On that basis, analysts had predicted a profit of 81 cents on sales of about $6 billion.