Nvidia posts another record quarter: shares rise by over 4 per cent in after-hours trading

The $5,000 billion tech giant also announced earlier this month a partnership – with Goldman Sachs, BlackRock and Apollo – to provide guarantees for data centre financing of up to $500 billion. Nvidia subsequently agreed to guarantee a massive data centre project in Ohio by OpenAI, with a commitment of $105 billion.



These projects, together with rumours of production capacity shortages and the company’s ambitious investment in developing artificial intelligence models to counter China, have caused concern amongst investors in recent weeks: so much so that the share price closed lower for seven consecutive trading days. “‘Artificial intelligence has reached its tipping point. It is doing useful work. Its tokens are productive and profitable,’ said Jensen Huang in a statement. “A year ago, a single lab was the driving force behind development; today,” he added, “we are experiencing a golden age of new research and start-ups in the field of AI, with multiple cutting-edge initiatives expanding in parallel, a thriving open ecosystem and physical artificial intelligence coming into operation.”

Nvidia expects revenue to exceed Wall Street’s expectations in the current third quarter: $108 billion (with a margin of error of 2 per cent), compared with the $105.2 billion forecast on average by analysts. In its guidance, Nvidia states that it has not included any sales of data centre chips to China. The gross margin – the company explained – will be around 74 per cent for the quarter, but could fall subsequently due to rising costs, settling between 71 per cent and 72 per cent in the period ending in January.

Despite the growing demand for Nvidia products, there remains a gap between what large technology firms spend on data centres and other IT infrastructure and the slow pace at which end-user artificial intelligence products generate profits, said Naveen Chhabra, a market analyst at Forrester. “Companies are struggling to integrate AI into production, and this situation won’t change overnight,” said Chhabra. “There is a growing gap between investment in AI and its value to businesses. The wider this gap becomes, the more problematic it gets. If AI projects fail to meet businesses’ expectations, they will abandon them.”