Nvidia Corp., the chipmaker at the heart of the artificial intelligence boom, gave a bullish sales outlook for fiscal 2028, easing concerns that AI spending is poised to lose momentum.
"We expect to grow revenue by approximately 70% in fiscal 2028," Chief Financial Officer Colette Kress said during a post-earnings conference call. Analysts have projected a rise of about 45% for that year, according to data compiled by Bloomberg.
Moreover, Nvidia would be growing even faster if it had access to more supplies, she said. "Incredibly, we are seeing demand acceleration even at our scale," she said. "Customers' forecasts point to our growth doubling next year."
The upbeat outlook offered relief to investors concerned about a bubble in the AI economy. Nvidia, the world's most valuable company, is the leading provider of AI accelerators, a key component for training and running artificial intelligence models. That status has turned its quarterly earnings into a barometer on the state of the wider industry.
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Shares of the company rose more than 4% in late trading following Kress' remarks.
In Nvidia's second-quarter earnings report, Chief Executive Officer Jensen Huang said demand is only accelerating. He also touted the rollout of the company's latest chip line, Vera Rubin.
"The AI infrastructure build-out is at full steam," he said. "Vera Rubin, now in full production, was built to power exactly this moment."
Revenue in the current period will be $108 billion, plus or minus 2%, the company said. Analysts had estimated $105.2 billion on average. Gross margin, the percentage of sales remaining after deducting the cost of production, will be roughly 74% in the quarter.
The company warned that margins would narrow in the coming months while Nvidia copes with a surge in memory costs. It expects the measure to bottom out in the fiscal fourth quarter - a period that runs through January - at 71% to 72%.
As Nvidia increases its own prices, the range should settle down to 72% to 73% in fiscal 2028, Kress said.
| The broader message was that there's been no letup in demand from customers. After years of runaway growth, some investors had become concerned about a potential bubble. Nvidia's myriad investment pacts with companies in the AI economy also sparked fears that circular deals will leave the industry on shakier ground. "We would love more supply," Kress said in an interview. "It's really about how much more could you do?" In the second quarter, which ended July 26, sales more than doubled from a year earlier to $96.2 billion. Profit was $2.22 a share, excluding certain items. Analysts had projected revenue of $92.5 billion and earnings of $2.09 a share. Nvidia's all-important data center division had revenue of $89 billion, compared with an average estimate of $85.8 billion. A group known as hyperscalers, which includes Amazon.com Inc. and Alphabet Inc.'s Google, accounted for much of those sales. Nvidia has sought to expand its customer base, aiming to show that it's less dependent on a small group of tech giants for much of its sales. ALSO READ: Nvidia Stock Price Jumps 5% In Extended Trading After Q2 Earnings — Key Numbers Here Investors, meanwhile, have gotten harder to impress. Nvidia has now delivered sales above Wall Street estimates for 16 quarters in a row. But that hasn't always helped its stock, with shareholders taking its rapid growth and outperformance as a given. The stock has fallen the day after five of its last six earnings reports. The only companies in the semiconductor industry that rival Nvidia's revenue run-up are the memory-chip makers: Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. Training and running AI software requires a massive amount of computer memory, which has fueled growth but also placed a huge strain on their factories. While they're expanding capacity, the companies don't expect to catch up with demand for years. The shortages caused the price of memory chips to soar.  The crunch affects Nvidia too because memory is packaged with its chips. It has notified customers that it's raising prices of its products to account for the growing costs. At the same time, a stampede of would-be rivals is eyeing Nvidia's lucrative market. And the company's own customers are increasingly developing in-house chips, potentially reducing their reliance on Nvidia in the long run. Just this week, ChatGPT maker OpenAI said its new Jalapeno processor performed better than Nvidia's current lineup during testing. Nvidia has spent much of the past year lining up investment deals with major AI companies, including both developers of software and the infrastructure that supports it. Those agreements - and the promised financial backing - have, in theory, put Nvidia on the hook for tens of billions of dollars of liabilities. The company has said such deals will speed the adoption of AI, something that will create even more demand for its products. But critics have voiced concern that circular financing will foster artificial demand. Kress described the deals as a part of Nvidia's efforts to increase supply. The biggest portion of its spending commitments took the form of long-term purchase agreements with vendors, she said. "The majority of what we have been helping folks with in terms of commitments is one very important thing called supply," Kress said. The company is also still fighting for greater access to the world's biggest market for semiconductors: China. It's been given limited scope by Washington to sell some of its AI chips in that country, but Beijing has held up the process by keeping a tight rein on purchases. For the company - and its investors - building a foothold in China is seen as both a pathway to growth and a way to ensure that the country's homegrown chipmakers don't get too powerful. |
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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