The China Mail - Nvidia reports 'off the charts' demand for AI chips

The solid results come amid increasing talk among Wall Street analysts of an AI bubble, with all eyes on how Nvidia, the industry's bellwether company, will weather the doubts.

"There's been a lot of talk about an AI bubble," Nvidia chief executive Jensen Huang said on an earnings call.

"From our vantage point, we see something very different."

Jensen reasoned that companies around the world are shifting from classical computing machines and software relying on CPUs to AI-infused systems needing graphics processing units (GPUs) that are Nvidia's specialty.

Add to that software programs rapidly adapting to the AI age and a trend of AI "agents" capable of independently tending to computer work, according to Jensen.

"Nvidia is chosen because our singular architecture enables all three transitions across every phase of AI," Jensen said.

"Our customer financing is up to them. We see opportunity to grow for quite some time."

AI is already paying off for internet giants in the form of improved recommendation engines and efficiencies, according to Jensen.

"The internet has trillions of pieces of content," Jensen said.

"How could they possibly figure out what to put in front of you and your tiny screen, unless they have really sophisticated recommender systems to do so well -- that has gone generative AI."

AI industry rivals have been pouring billions of dollars into Nvidia's prized GPUs to power the technology despite questions regarding how the investments will pay off.

Wedbush analyst Dan Ives referred to Nvidia earnings as a "pop the champagne" moment for the tech sector and a sign that worries of an AI bubble are overstated.

- China sales stalled -

Nvidia reported profit of $31.9 billion on record-high quarterly revenue of $57 billion, sending shares up more than 5 percent.

It also took in some 60 percent more money in the quarter than it did during the same period the prior year, according to earnings figures.

"Blackwell sales are off the charts, and cloud GPUs are sold out," Huang said, referring to the latest model of its state-of-the-art hardware.

"The AI ecosystem is scaling fast -- with more new foundation model makers, more AI startups, across more industries, and in more countries."

Revenue in the current quarter is expected to be $65.0 billion, nearly $3 billion more than forecast by Wall Street analysts.

Most of the money brought in during the recently ended quarter came from Nvidia's unit devoted to GPUs for data centers.

Nvidia was valued at more than $4.5 trillion based on the number of outstanding shares.

In the period, Nvidia announced strategic partnerships with OpenAI to deploy at least 10 gigawatts of systems for next-generation AI infrastructure, while Anthropic will adopt one gigawatt of compute capacity using Nvidia's latest systems.

Nvidia is caught up in President Donald Trump's trade war with China, where Beijing has responded by expressing national security concerns about Nvidia chips and urging Chinese businesses to rely on local suppliers instead.

Sales of H-20 GPUs, which are designed for the Chinese market due to US restrictions on exports of AI chips to that country, tallied only $50 million in the quarter, according to chief financial officer Colette Kress.

"Sizable purchase orders never materialized in the quarter due to geopolitical issues and the increasingly competitive market in China," Kress said on an earnings call.

"To establish a sustainable leadership position in AI computing, America must win the support of every developer and be the platform of choice for every commercial business, including those in China."

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