NVIDIA’s sales forecast for February-April exceeds expectations, stock price soars as AI demand continues | Reuters

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The sales forecast for the first quarter (February-April) announced by US semiconductor giant Nvidia on the 21st exceeded market expectations. Photographed in October 2023 (2024 Reuters/Ann Wang)

[２１日 ロイター] – U.S. semiconductor giant Nvidia (NVDA.O), opens new tab, announced on the 21st that its sales forecast for the first quarter (February-April) was up approximately 233% year-on-year, exceeding market expectations. Demand for semiconductors for artificial intelligence (AI) is expected to increase.

Shares soared 10% in post-close trading. Market capitalization increased by more than $129 billion.

The sales forecast for the first quarter is around $24 billion, plus or minus 2%. Analysts polled by LSEG had expected sales to rise 208% to $22.17 billion.

Sales for the fourth quarter (November 2023-January 2024) were $22.1 billion. This was 7% higher than the market estimate of $20.62 billion.

Sales in the data center sector, the company’s top earner, rose 409% to $18.4 billion, beating market expectations of $16.8 billion. In the third quarter, sales increased by about 280%.

Adjusted earnings per share were $5.16. This exceeded market expectations of $4.64.

The adjusted gross profit margin forecast for the first quarter is 77%, plus or minus 0.5%. The market expectation was 75.6%.

Thomas Monteiro, an analyst at Investing.com, said, “Due to high expectations in advance and the deterioration of the macro environment, the market was prepared to “sell on the news” after the earnings announcement, but Nvidia is once again taking advantage of the AI ​​boom. There is no doubt that this is not just the stock market narrative, but the most important bet for companies around the world right now.”

As companies rush to expand their AI services, demand for NVIDIA’s semiconductors for data centers and image processing semiconductors (GPUs) continues to increase, and the company’s products almost monopolize the global AI semiconductor market.

However, the extent of the company’s sales forecast above market expectations has shrunk compared to last year. Sales for the first three quarters of fiscal 2023 exceeded market expectations by 10-20%.

“It’s another strong quarterly result, but it begs the question of how long this rapid expansion will continue,” said Jacob Bourne, an analyst at Insider Intelligence. “The company has a considerable lead in the growing global AI semiconductor sector, but we cannot afford to be complacent.”

The company’s supply chain, which had not been able to keep up with the rapidly expanding demand for semiconductors, is also improving.

However, CEO Jensen Huang told an analyst briefing that even though the company is working to expand production, it will be difficult to “reasonably” keep up with demand in the short term.

“The biggest questions about growth are how constrained supply will remain and how demand will behave over time,” said Ben Bajarin, CEO of consulting firm Creative Strategies.

Analysts focus on major supplier Taiwan Semiconductor Manufacturing Co. (TSMC)2330.TW, opens new tab>’s advanced packaging capacity is expected to improve in the first half of this year. Nvidia can expect supply constraints to ease.

Furthermore, the company’s sales continue to increase even in the face of tightening US export regulations to China.

In addition to the financial results, Nvidia disclosed in its disclosure documents that it had received requests from antitrust authorities in France, the European Union (EU), the United Kingdom, and China regarding efforts to distribute GPU sales and supplies, and that it plans to do so in the future. He said he expected additional requests.

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