Nvidia Confirms AI Boom by 3x'ing RevenueNov 27, 2023
But The Street is hungry for more
Here's a shocker: Nividia rode ludicrous AI demand to triple their revenue from last year and beat the market's already sky-high expectations. Is it enough though?
Nvidia keeps stepping their game in terms of chip production. They managed to generate a brain-breaking $4.02 EPS from $18.2 billion in revenue. Those are both double-digit beats of Wall Street expectations. The lion's share of growth here came from Nvidia's data center business, which rose 271% YoY thanks to new partnerships with massive cloud providers and expanded production. Gaming also pulled off a really impressive 81% YoY revenue increase, but who even cares about other business lines at this point?
Despite absolutely obliterating expectations, Nvidia stock wavered a bunch in the pre-market thanks to comments about Chinese restrictions becoming a real limiter for their revenue prospects. Revenue from areas where the U.S. is imposing restrictions is set to 'decline significantly' in the next few months. Now, Nvidia management immediately qualified that statement by assuring analysts that other geographies would more than offset those declines, but investors still decided to freak out a little.
WHY IT MATTERS
Ultimately, this is a positive beat and proof that AI demand is sticky enough to give Nvidia the firepower to basically carry the entire S&P 500 on their own. Things are going to start getting really difficult next year as they have to compare their revenue growth to the astounding leaps they had this year, but new services might be enough to help them keep the acceleration going. While U.S. restrictions are a mild concern, the main issue Nvidia faces is the fact that eventually, this growth will have to start leveling off a little. Once that process starts, the price action here will get really interesting. For now, though, this is Nvidia's economy and they are carrying it well.