As tech giants like Google (NASDAQ: GOOGL), Meta (NASDAQ: META), and Microsoft (NASDAQ: MSFT) splash billions of dollars to leap ahead in the artificial intelligence (AI) race, it’s the company powering all their systems that’s emerging the biggest winner. Nvidia (NASDAQ: NVDA) doubled its revenue in the second quarter, crushing Wall Street estimates and sending its stock price to a new record.
In its earnings call, the Santa Clara, California-based company announced $13.51 billion in revenue, with growth in the demand for its AI chips playing the most significant role. Nvidia crushed Wall Street’s estimate of $11.2 billion by over $2 billion and sent the company’s stock up by 8% after hours to hit a new all-time high.
The company is now valued at $1.16 trillion, having hit the trillion-dollar club in early June as AI adoption soared. Nvidia has shot up 220% from its $364 billion valuation in January, making it now the sixth-largest company in the world.
Nvidia is betting its future on AI, and it’s primely positioned to leverage the new era of new technology, says CEO Jensen Huang.
“A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” he said.
This year, not only has the demand for Nvidia’s AI chips spiked, but the company is also making much more per chip. The earnings results show that the company’s gross margin went up 25% year-on-year in Q2 to 71.2%. This is among the highest for major companies that manufacture physical products, with Apple’s (NASDAQ: AAPL) margin for Q2 at 44%. Nvidia’s chip sector rival AMD announced a gross margin of 46%.
Nvidia is predicted to continue dominating the AI chip sector, with some analysts now estimating its stock price will hit $1,600, a 3x spike from its current price.
The risk for Nvidia would be if the hike in AI chip demand dipped. Wall Street analysts have questioned how sustainable the company’s rise is, but Huang dismissed the fears. He says that beyond the current AI hype, companies are on the track to accelerated computing.
“We have excellent visibility through the year and into next year. I think this is not a near-term thing, this is a long-term industry transition. We’re seeing these two platform shifts happen at the same time,” he said.
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