Nvidia shares jump after revenue spike fueled by AI chip demand

Investing.com -- Nvidia (NASDAQ:NVDA) reported better-than-expected fourth-quarter revenue and outlined a bullish forecast for artificial intelligence-fueled chip demand, sending shares sharply higher in early trading on Thursday. 

Chief Executive Jensen Huang, weighing in on a boom in so-called generative artificial intelligence that has powered a massive spike in the company's valuation over the past 12 months, said the nascent technology is at a "tipping point."

"Demand is surging worldwide across companies, industries and nations," he said.

For the three months ended Dec. 31, Nvidia announced earnings per share of $5.16 on revenue of $22.1 billion. Analysts polled by Investing.com anticipated EPS of $4.64 on revenue of $20.55 billion.

Nvidia's data center unit, a gauge of AI demand, saw revenue swell to $18.40B, up 409% from a year earlier, beating estimates of $17.06B amid rising demand for its AI graphics processors including the H100. 

"Nvidia delivered against what was seemingly a very high bar with Data Center once again serving as the key growth driver," analysts at Goldman Sachs said in a note to clients.

Speaking with investors, Huang said Nvidia's high-end chips had become "AI-generation factories" in a new industrial revolution that will encompass "every industry." The company is now looking to bolster this position, although analysts have flagged that intensifying competition and cooling sales in China may complicate this task.

Data center sales to China "declined significantly" in the fourth quarter due to U.S. government licensing requirements, Nvidia said. In a note, analysts at Bank of America said that Nvidia's future growth in the country -- which accounts for roughly a fifth of its total revenue -- could "face additional risks if shipment restrictions tighten again."

For the current quarter, revenue is expected to be $24B, give or take 2%, topping analyst estimates for $22.01B. Adjusted gross margins are expected to be 76.3% and 77.0%, respectively, plus or 50 basis points.

"We had never seen $2 bn+ of upside to quarterly revenue guidance until Nvidia did it a few quarters ago, but it has become routine during the AI surge," analysts at Morgan Stanley wrote in a note.

Yasin Ebrahim contributed to this report.

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