Chip giant Nvidia’s sales expected to double as AI boom continues

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Tech giants Nvidia The company’s profits will soar again on the back of a doubling of revenue, thanks to the rapid adoption of generative artificial intelligence (AI).

The chip company is currently the world’s second largest listed company, second only to MicrosoftIts shares have surged more than 160% since the beginning of the year as investors bet on the continued growth of the company’s artificial intelligence and data center businesses.

On Wednesday, Nvidia will update shareholders and analysts on its trading performance for the second quarter ended July.

After the company’s strong first quarter results, they are looking to deliver another impressive performance.

Revenue for the quarter ended in April surged 262% to $26 billion, beating industry forecasts outlined in a previous update.

Nvidia’s growth was driven by rapid expansion of its data center business, including the development of its H100 graphics card, which is widely used to power generative AI applications such as ChatGPT.

As a result, data center revenues grew more than fivefold in the first quarter compared to the same period last year.

Analyst consensus forecasts compiled by Zacks Investment Research show that overall group revenue could rise 109% in the second quarter as artificial intelligence-related growth continues to support the business.

Aarin Chiekrie, Equity Analyst Hargreaves Lansdown“Analysts expect this momentum to continue into next week’s earnings release,” it said.

“Companies like Meta, Amazonand Microsoft are among the customers, all of which have deep pockets and want to harness the power of Nvidia’s market-leading chips to build their own AI products.

“This supports the market’s view that second quarter revenue and operating profit are likely to more than double to $28.6bn (£21.8bn) and $18.7bn (£14.3bn) respectively.”

The analyst said he believes the forecasts look “achievable,” so investors may be particularly focused on the outlook for the rest of the year.

Analyst Ajay Bell said Nvidia has “beat consensus estimates and raised guidance in each of the past five quarters,” and agreed that investors will be watching for trends over the rest of the year.

They added that investors are likely to focus on the latest news about delays in the launch of new AI chips using the Blackwell architecture, production of which is expected to increase in the second half of this year.