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Can Nvidia's revenue grow 70% next year as AI demand surges?
Nvidia projects 70% revenue growth next fiscal year as AI demand drives record sales, strong data center revenue and a 4.4% after-hours stock jump.
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Nvidia is expecting very strong revenue growth next year, with revenue projected to grow by about 70% in its next fiscal year. The forecast pushed Nvidia shares higher in after-hours trading.
Nvidia is seen as an important indicator of the health of the wider AI industry. Its business depends heavily on demand for AI chips and data-center technology. Nvidia's stock has recently underperformed the wider semiconductor sector. The latest forecast could give investors more confidence that demand for AI technology remains strong, according to Axios.
Nvidia earnings
Nvidia beat Wall Street expectations in its latest quarter. The company reported better-than-expected revenue and earnings for the quarter that ended July 26. Nvidia reported $96.2 billion in revenue for the latest quarter. That was more than double the revenue it reported in the same quarter a year earlier, according to company results cited by Axios.
Nvidia's net income jumped 126% to $59.7 billion in the latest quarter. The results were above expectations. Analysts tracked by S&P Capital IQ had expected $92.1 billion in revenue and $51.2 billion in earnings for the quarter, according to Axios.
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Data centers remained Nvidia's biggest source of sales. Revenue from the business jumped 117% to $89 billion in the latest quarter, showing how strong demand for AI computing remains. Nvidia also gave investors a strong forecast for the next quarter. The company expects $108 billion in revenue, plus or minus 2%. If Nvidia reaches that forecast, it would be the first time the company crosses $100 billion in quarterly revenue, according to Axios.
Nvidia stock
Nvidia's stock initially fell slightly in after-hours trading after the earnings report. Investors have set very high expectations for the company because of the huge AI boom. The shares then changed direction after Nvidia CFO Colette Kress gave the company's revenue outlook during the earnings call.
Kress said Nvidia is still "supply constrained," meaning the company does not have enough supply to meet all the demand for its products. Kress said that if Nvidia were not limited by supply, the company could double its revenue next year.
The strong outlook helped Nvidia shares recover. The stock rose 4.4% in after-hours trading. The move came after Nvidia had suffered a seven-day losing streak through Monday, making the after-hours jump especially notable.
AI investment
Nvidia's latest results also come at a time when the company is becoming more involved in financing and investing in its AI customers. Nvidia has made several investments and capital deals aimed at supporting the growth of the AI industry and strengthening its customer base, according to Axios.
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One recent example is Nvidia's deal to backstop an OpenAI data center. This means Nvidia is helping provide financial support for the project. These deals have raised concerns about "circular financing" in the AI industry.
The concern is that AI companies, chipmakers and other technology companies could end up financially supporting each other, creating a cycle that makes AI spending look stronger than it really is.
Nvidia CEO Jensen Huang has rejected those concerns. He said he is happy that Nvidia is investing in leading AI companies. Huang called the opportunity a "once-in-a-generation opportunity." He also said he wished Nvidia had invested more and sooner.
Nvidia AI support
Nvidia's CFO Kress suggested that the company could provide even more financial support to AI companies. Kress said Nvidia plans to offer "selective credit enhancement" for nearly two gigawatts of computing capacity for another leading AI company, according to Axios.
Kress also acknowledged that some people will describe Nvidia's strategy as circular financing. However, she said Nvidia sees the situation differently. She argued that the AI companies receiving support have strong technology, growing customer demand and rapidly increasing usage.
Kress did not name the companies involved. She described them as "once-in-a-generation companies" and said their technology leadership has already been proven. Kress also said Nvidia expects these AI companies to become some of the largest technology companies in history.
Nvidia's latest numbers show that demand for AI chips and data-center technology remains extremely strong, while the company is also taking a bigger role in helping its AI customers grow. The combination of $96.2 billion in quarterly revenue, a $108 billion next-quarter forecast and an expected 70% revenue increase in the next fiscal year shows why Nvidia remains one of the biggest companies at the center of the global AI boom.
