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Tech shares race ahead as Nvidia delights with AI-driven doubling of revenue

The US tech firm that dominates the market for chips used in artificial intelligence (AI) has delighted investors with a doubling in quarterly revenue, promising more of the same in future.

Nvidia shares gained almost 10% in after-hours trading in New York on Wednesday night when it revealed a string of numbers that beat analysts’ expectations.

The icing on the cake for shareholders was news of a $25bn (£19.7bn) share buyback.

The California-based firm, which became the first chipmaker to achieve a $1trn market value in May, credited a boom in generative AI technologies that can read and write in human-like ways, such as ChatGPT.

It is struggling to keep up with demand for its chips, known as graphics processing units (GPUs), with analysts estimating that it will be next year before supply chain investment will allow production to catch up.

AI systems, made from its own chips and those of rivals, also stoked its impressive revenue growth.

Adjusted revenue over the three months to June came in at $13.51bn.

More on Artificial Intelligence

A figure of $11.2bn had been expected on Wall Street.

The company forecast third-quarter revenue of about $16bn, way above an average market forecast of $12.6bn.

Nvidia Corp chief executive Jensen Huang introduces the Grace Hopper Superchip at the COMPUTEX forum in Taipei, Taiwan May 29, 2023
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Nvidia Corp chief executive Jensen Huang introduces the Grace Hopper Superchip in Taiwan in May

“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” Jensen Huang, Nvidia’s chief executive, said in a statement.

Nvidia’s second-quarter report lifted the shares of other big tech stocks and AI-related companies, with Microsoft jumping 1.9%, Meta Platforms up 2.1% and Palantir Technologies surging 4.6% in extended trading.

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Calls for pause in AI research

Insider Intelligence senior analyst Jacob Bourne said of Nvidia’s performance: “Its Q2 results underscore its dominant position in harnessing the AI momentum.”

But he cautioned: “Yet as global appetite for Nvidia’s chips intensifies, navigating supply chain hurdles to boost production is essential.”

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