Aug 23 (Reuters) - Nvidia (NVDA.O) far exceeded expectations with its quarterly revenue forecast on Wednesday as an artificial-intelligence boom fueled demand for its chips and said it would buy back $25 billion in stock, sending its shares soaring after hours. Nvidia's forecast beat expectations by billions of dollars, demonstrating that a boom in generative AI technologies that can read and write in human-like ways - and powered almost exclusively by Nvidia's chips - shows no signs of slowing down.
Nvidia's additional $25 billion in share repurchases announced on Wednesday come as shares have already tripled this year, making the company the first ever trillion-dollar chip business as investors bet Nvidia will be the key beneficiary of the AI boom. Analysts have estimated that demand for Nvidia's prized AI chips is exceeding supply by at least 50%, adding that the imbalance will stay in place for the next several quarters.
"Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” Jensen Huang, Nvidia's chief executive, said in a statement. Shares of Santa-Clara, California-based Nvidia rose 9.6% in trading after the bell, hitting an all-time high. But it was the company's entire AI systems, not just its chips, that were the largest contributor to the quarter's growth, according to its executives. Although known for its graphics processing units (GPUs), Nvidia produces whole AI machines with memory chips from other suppliers and tens of thousands of other parts.
Nvidia's report lifted the shares of other Big Tech stocks and AI-related companies, with Microsoft jumping 1.9%, Meta Platforms (META.O) up 2.1% and Palantir Technologies (PLTR.N) surging 4.6% in extended trading on Wednesday. The results were a "'drop the mic' moment in our opinion that will have a ripple impact for the tech space for the rest of the year," said Daniel Ives, analyst at Wedbush Securities. From AI startups to major cloud services providers like Microsoft (MSFT.O), all are looking to get their hands on more Nvidia chips. Demand from China is also in overdrive, as companies there are placing rush orders to stockpile chips before any further U.S. export curbs come into action. Should the U.S. place additional export restrictions on AI chip sales to China, it would have no immediate impact on the company's results, finance chief Colette Kress told analysts on a conference call. Such controls would "result in a permanent loss of an opportunity for the U.S. industry to compete and lead in one of the world's largest markets.
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