New York CNN –
Last year was a breakthrough year for artificial intelligence, and no company benefited from the trend more than chipmaker Nvidia.
Results released Wednesday show Nvidia's profit rose to nearly $12.3 billion in the three months ended Jan. 28 – up from $1.4 billion in the year-ago quarter, a 769% increase in the year Year-over-year and even stronger growth than Wall Street analysts expected. This result helped the company's full-year profit rise more than 580% compared to the previous year.
Nvidia also reported 265% year-over-year revenue increases in the fourth quarter, also beating analysts' forecasts, as the company continues to ride the wave of massive AI investments.
“Demand is increasing globally across all companies, industries and countries,” CEO Jensen Huang said in a statement on Wednesday. In a call with analysts following the report, Huang likened the widespread adoption of AI technology to the beginning of a new industrial revolution.
Nvidia is crucial to the emerging AI space. The American chipmaker is unrivaled in producing processors that power artificial intelligence systems, including generative AI, the popular new technology that can create text, images and other media.
According to Dan Morgan, vice president of Synovus Trust Company, Nvidia accounts for around 70% of AI semiconductor sales, although Meta, Amazon, IBM and Microsoft have all started producing some of their own chips.
Thanks to partnerships with infrastructure giants like Google, Amazon and Cisco, revenue from the company's core data center business rose 409% year over year to a record $18.4 billion in the fourth quarter.
But the rapid rise in the company's share price over the past year – shares grew around 230% in 2023 – means that Nvidia is now also of great importance to the broader market. In a note Tuesday, Goldman Sachs analysts called Nvidia “the most important stock on planet Earth.” Nvidia was the best-performing stock in the S&P 500 in 2023.
Following Wednesday's report, shares of Nvidia rose nearly 7% in after-hours trading.
But some shareholders fear the massive growth can't last forever. And U.S. restrictions imposed last year on exports of advanced AI chips to China, which affected products like Nvidia's H800 and A800 chips, threaten to stifle access to a huge and fast-growing market.
The company acknowledged that data center sales to China “declined significantly” in the January quarter due to the restrictions, although other regions still contributed to the unit's strong growth.
“However, if Nvidia does not find a long-term workaround to the restrictions, it could impact future growth,” Morgan said in emailed comments ahead of Wednesday's report.
Nvidia executives said in the earnings call that the company had already started shipping alternative chips to China that don't violate the restrictions. CFO Colette Kress said China accounted for a mid-single-digit percentage of its total data center business in the fourth quarter and was expected to remain in a similar range in the current quarter.
Despite the turmoil in China, others on Wall Street believe the company still has plenty of room to run.
“The outlook for Nvidia is positive as AI chip competition from Intel, AMD, Meta and Microsoft could be months away while demand for Nvidia chips is only increasing,” said Gadjo Sevilla, senior analyst at Insider Intelligence, in a note earlier this week.
Currently, the company says demand for its advanced AI chips continues to “exceed supply,” Kress said on Wednesday's earnings call. “Building and deploying AI solutions has reached virtually every industry.”
Heading into this year, it could be a challenge for the company to ensure supply meets booming demand. However, “the company's cycle times are improving…overall our supply is increasing very well,” Huang said.
The company said Wednesday that it forecasts revenue of about $24 billion for the current quarter, up 233% from the year-ago quarter and above Wall Street expectations.