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Nvidia (NASDAQ:NVDA) shares soared 8% during postmarket trading on Wednesday, propelled by the company’s resounding fourth-quarter fiscal 2024 financial results that once again outstripped expectations.
The Unstoppable Force of Generative AI
During the postmarket earnings call, executives illuminated the ever-expanding interest across companies and industries in Nvidia’s generative AI, which has engendered an insatiable appetite for its products.
“Generative AI isn’t just a new application,” explained Jensen Huang, founder and CEO of Nvidia. “It is facilitating an entirely new approach to software development. It represents a paradigm shift in computing, propelling the emergence of an entirely novel industry. It is the backbone of our growth.”
“We are diversifying across diverse sectors,” he added. “Automotive, healthcare, robotics, financial services… a myriad of multi-billion dollar industries are embracing our generative AI.”
He foresaw AI generation plants flourishing in every conceivable sector.
“The world has reached a pivotal moment,” remarked Colette Kress, Nvidia’s chief financial officer. “Data Center revenue in the fourth quarter was driven by generative AI and training. We estimate that approximately 40% of Data Center revenue over the past year was attributable to AI.”
She accentuated the recent triumph of Microsoft’s (MSFT) Copilot, which harnesses Nvidia’s generative AI. Furthermore, Meta (META) cited generative AI as a key catalyst behind its recent growth.
“One of the most discernible trends in the past year has been the adoption of AI across industries,” noted Kress. “Almost 80 vehicle manufacturers are adopting Nvidia’s AI platform for autonomous driving and other applications. This is a trajectory we anticipate will continue to ascend.”
“Pharmaceutical companies are embracing Nvidia’s generative AI for computer-aided drug discovery,” she added. “In the financial sector, AI is being utilized for fraud detection, customer service, and trading.”
Regal AI has also become a burgeoning source of demand in markets beyond the borders of the U.S. and China.
“The growth has been robust globally, excluding China,” Kress affirmed.
“During the fourth quarter, the revenue share from data centers in China was in the mid-single-digits,” Kress highlighted. Nvidia expects this ratio to remain unchanged for the ongoing quarter.
Charting the Path Ahead
Embarking into new ventures, Nvidia’s Spectrum-X networking platform represents the premier Ethernet platform designed to enhance the performance of generative AI over the ethernet.
“We are on pace to deliver Spectrum-X this quarter,” assured Kress.
Looking towards the first quarter of fiscal 2025, Nvidia anticipates generating $24B in revenue, plus or minus 2%. Analysts’ projections rested at $22B in revenue.
“While we guide quarter by quarter, the backdrop for expansion is immensely favorable,” Huang emphasized. “We stand on the cusp of a shift from general-purpose computing to accelerated computing.”
For the quarter concluded on January 28, 2024, Nvidia reaped an adjusted $5.16 per share on $22.1B in revenue. Analysts had predicted earnings of $4.64 per share on revenues of $20.5B for the quarter.