2023 was a breakout year for artificial intelligence technology, and no company benefited more from the trend than Nvidia. The American chip manufacturer is crucial to the burgeoning AI space as it produces processors that power artificial intelligence systems, including generative AI software.
Nvidia’s Posts Year-On-Year Gains Of 769% In Q4 2023
On Wednesday, February 21, the chipmaker published its earnings report for the fourth quarter of 2023, which showed the company’s profits grew to nearly $12.3 billion in the three months ended January 28. This is up from $1.4 billion in Q4 2022, a year-over-year gain of 769%.
The performance in the last quarter helped bring Nvidia’s full-year profits up more than 580% from the year earlier. The company also posted fourth-quarter revenue gains of 265% year-over-year.
Nvidia’s performance in Q4 2024 exceeded the projections of Wall Street analysts as it continues to ride the AI investment wave.
According to Dan Morgan, vice president of Synovus Trust Company, Nvidia accounts for nearly 70% of all AI semiconductor sales. This is even after tech giants like Meta, Amazon, IBM, and Microsoft have all begun producing their own AI chips in some capacity.
Thanks to partnerships with Google, Amazon, and Cisco, Nvidia’s core data center business returned a record sales of $18.4 billion in the fourth quarter, which is a growth of 409% year-over-year.
Quarterly Performance Of The World’s Most Important Stock Resulted In AI Tokens Surging
The company’s soaring stock price, which has grown around 230% in the last year, is now crucial to the broader market.
In a note to investors on Tuesday, Goldman Sachs analysts called Nvidia “the most important stock on planet Earth”. Nvidia was the top-performing S&P 500 stock in 2023.
The chipmaker’s staggering quarterly performance also impacted the cryptocurrency market, especially among the tokens of AI-related blockchain projects.
AGIX, the native token of SingularityNET, experienced a whopping 32% gain on Wednesday to trade at $0.7141. Other notable increases included Fetch.AI and its native token FET, which gained 6.4% in value to trade at $1.10, and Render (RNDR), which enjoyed a 13.8% uptick in 24 hours to trade at $7.18.
Nvidia’s graphics processors are essential for developing these AI models, which helped secure its financial windfall.
Export Restrictions On China Continues To Choke Nvidia, But Its Business Prevails
Despite the company’s performance making a positive impact on the financial and tech market, some stakeholders worry that the massive growth won’t be sustained forever.
In a note to clients, Singapore-based crypto asset trading firm QCP Capital hinted at a potential volatility. Analysts at the firm noted that a key event that could trigger a wider correction is Nvidia’s earnings. As a major part of the S&P 500 Index, the company’s performance could “set the tone for US equities in the near term.”
Meanwhile, the restrictions introduced by the US last year on exports of advanced AI chips to China threaten to create an access bottleneck to the massive and fast-growing AI market. Nvidia, in particular, was hit by the export ban that affected its products like the H800 and A800 chipsets.
In the earnings report, the company acknowledged that its data center sales to China “declined significantly” in the quarter ending January because of the trade restrictions. Nevertheless, exports to other regions contributed to strong growth in the unit, highlighted Nvidia.
During the earnings call, company executives said they have already begun shipping alternative chips to China that don’t violate US restrictions. According to Nvidia’s CFO Colette Kress, the country represented a mid-single-digit percentage of its overall data center business in the fourth quarter of 2023 and is expected to remain in a similar range in Q1 2024.
Despite the hurdles, Wall Street believes the chipmaker still has plenty of room to run.
Inside Intelligence senior analyst Gadjo Sevilla said in a note earlier this week that the market 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 going to surge.
Nvidia said that it projects revenue for the running quarter to come in around $24 billion, marking a 233% increase from Q1 2023. This figure is also ahead of what Wall Street analysts forecasted for the company.
