Nvidia targets $11 bn revenue aiming to supply more AI chips

Nvidia forecast second-quarter revenue of $11 billion, saying it is boosting supply to meet demand for its artificial-intelligence (AI) chips that power ChatGPT and many similar services.
Nvidia chip businessNvidia faces competition in AI chips from big rivals like Advanced Micron Devices (AMD) and Intel, as well as from startups such as Cerebras Systems and the in-house AI chip efforts at companies like Alphabet’s Google and Amazon.com.

Nvidia is planning capital expenditures (Capex) of $300 million to $350 million for the current quarter and $1.10 billion to $1.30 billion for full year fiscal 2024.

Nvidia has reported revenue of $7.19 billion, down 13 percent from a year ago and up 19 percent sequentially, for the first quarter ended April 30, 2023.

Nvidia has generated first-quarter revenue of $4.284 billion (+14 percent) from data center chip sales, $2.24 billion (–38 percent) from gaming chips, $295 million (–53 percent) from professional Visualization and $296 million (+114 percent) from Automotive business.

The revenue growth in Data Center business reflects strong demand from large consumer internet companies and cloud service providers. Enterprise demand for GPU platforms was strong, although general purpose networking solutions declined.

The drop in Gaming revenue reflects weaker demand due to the macroeconomic slowdown and lower shipments to normalize channel inventory levels. The sequential increase was driven by the ramp of new GeForce RTX 40 Series GPUs for desktops and laptops based on the Ada Lovelace architecture.

Nvidia has generated revenue of $4.46 billion (+21 percent) from Compute & Networking and $2.732 billion (–41 percent) from Graphics business units.

Nvidia Chief Executive Officer Jensen Huang told Reuters that the company had started full production of its latest AI chips in August last year, which gave it some buffer for supplies when chatbot apps exploded in popularity.

“In January, the new demand was incredibly steep,” Huang said. “We had to place additional orders, and we procured substantially more supply for the second half” of 2023.

“Given the generative AI gold rush taking place, this should fuel demand for Nvidia’s chips for the remainder of the year,” said Edward Jones analyst Logan Purk.

Huang said Nvidia has shifted toward selling entire AI supercomputing systems, rather than just chips, to large companies that want to own – and are willing to pay for Nvidia’s prices and gross margins – AI expertise comparable to Silicon Valley’s tech giants.

“No company can build a state-of-the-art AI datacenter without the technology and all the software of a (cloud computing provider), but we have all that capability,” Huang said. “The enterprise is a very, very different market.”

Nvidia reported that its net income rose to $2.04 billion, or 82 cents per share, from $1.62 billion, or 64 cents per share, a year earlier.