Nvidia Poised for Record Sales as AI Demand Kicks In

Chip giant Nvidia is starting to capitalize on the craze for language-generating artificial intelligence, projecting a more than 64% jump in sales as the company rushes to get more processors in customer hands to satisfy booming interest in the technology.

The company forecast a record $11 billion in sales for the current quarter, far above the $7.2 billion Wall Street was expecting and what would be the highest quarterly total ever for the company. Demand for computing power that drives language-generating tools such as OpenAI's ChatGPT is opening a huge new revenue opportunity for the company and others.

Nvidia's chips are essential in creating these kinds of tools, analysts say, and building just one such AI system can require thousands of Nvidia's computing engines. Nvidia doesn't manufacture its own chips but farms out production to contract chipmakers including the world's largest, Taiwan Semiconductor Manufacturing Co. TSMC's shares, which trade in New York and Taiwan, rose by 7% after-hours in the wake of Nvidia's results.

Nvidia on Wednesday said revenue fell 13% to $7.2 billion in its last fiscal quarter, topping forecasts from analysts surveyed by FactSet. Net profit rose 26% to $2 billion. The sales retreat was driven by a sharp decline in the graphics chips business for videogamers, who pulled back after the pandemic eased and are only beginning to resume buying. Nvidia's stock rose nearly 25% in after-hours trading on the New York Stock Exchange in reaction to the release.