Nvidia’s Remarkable Performance in AI-chip Systems Market


Wall Street had high expectations for Nvidia Corp.’s quarterly performance, but the reality surpassed even the most optimistic forecasts. The demand for AI-chip systems skyrocketed, leading to an impressive surge in revenue and highlighting the company’s continued momentum.

Morgan Stanley Analyst Recognizes Nvidia’s Supply Chain Success

Morgan Stanley analyst Joseph Moore commended Nvidia on its “remarkable supply chain performance” in successfully ramping up artificial-intelligence systems. He reiterated his overweight rating on the stock and raised his price target to $630 from $500.

High Demand Exceeding Supply

Interestingly, despite a revenue growth of over 3 times in the past 6 months, Nvidia is only meeting around half of the demand, based on channel assessments. This improvement is partly due to price adjustments, with H100 prices being 2.5 times that of A100, and an increase in server form business due to limited supply of cards.

Surprising Growth in Customer Activity

The most surprising aspect of Nvidia’s success lies in the widespread and rapid development of demand. Customers across the board are spending more on AI than they had anticipated just six months ago. The training of large language models has especially exceeded expectations.

Unexpected Spending from Small Cloud and Consumer Customers

While growth in spending from large global hyperscalers was expected, the level of spending from smaller cloud and consumer customers has been particularly surprising. It showcases the widespread adoption and interest in AI-chip systems.

Nvidia released its earnings report on Wednesday, demonstrating that the demand for AI-systems led to data-center sales exceeding the Wall Street consensus by over $2 billion. Furthermore, the company’s third-quarter revenue forecast surpassed expectations by more than $3 billion.

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