The largest chipmaker’s results show that Nvidia continues to expand while demand for powerful AI chips remains high.
- Nvidia recorded revenues in the third quarter of the year amounting to $35.08 billion, compared to $33.16 billion expected by the London Stock Exchange Group (LSEG).
- Regarding earnings per share, they amounted to 81 adjusted cents, compared to 75 adjusted cents expected by LSEG.
- The company expects sales of $37.5 billion, plus or minus 2 percent, in the current quarter, compared to $37.08 billion expected by analysts surveyed by LSEG.
- Fourth-quarter forecasts indicate annual growth of about 70 percent compared to the previous year, down from annual growth of 265 percent in the same period the previous year.
The company’s revenue rose 94 percent year-over-year during the quarter ending October 27. This still represents a sequential slowdown from the previous three quarters, when sales rose 122, 262 and 265 percent, respectively.
The company’s market capitalization, at $3.578 trillion, is the largest company by market capitalization, surpassing… Apple ($3.461 trillion), Microsoft ($3.089 trillion), and Alphabet ($2.161 trillion).
The company’s market value has increased by about 192.57 percent since the beginning of this year, while it had increased by about 235.88 percent last year, according to companiesmarketcap data.
Positive expectations
The Managing Director of ADT Consulting and Technology Systems, Mohamed Saeed, expects the company’s positive performance to continue.NVIDIA” in the short and medium term, indicating that this comes as a result of the company’s clear dominance of the market for chips used in artificial intelligence applications, which is considered the primary driver of the growth of this sector in recent years.
Saeed explains, in exclusive statements to the “Eqtisad Sky News Arabia” website, that the company’s expected positive performance is linked to the performance of the company as a whole, due to its smart strategy in exploiting new trends in the business and technology sectors, adding: “Nvidia has clear superiority in providing cloud services used in the fields of “Games and the business sector, and it has expanded into the software field, which reflects its high ability to adapt to market needs and ride different waves of innovation.”
He emphasizes that NVIDIA is always taking steps ahead of its competitors, thanks to its strong investments in research and development, especially in the areas of quantum computing, which is considered one of the promising future trends, adding: “NVIDIA is not only a leader today, but is also one of the first companies prepared for the next waves of innovation.”
However, the IT expert points out that Nvidia may face major challenges in the long term. Among these challenges is the entry of major companies – such as Google, Amazon, and Apple – which are currently considered among its clients, into direct competition in the market, in addition to the efforts of other companies, such as Intel, to regain their position in this field.
He continues: Geopolitical and legal risks may also pose a threat to the company’s performance. Political risks, such as tension between Taiwan and China, may affect the company’s production and sales. Also, the legal threats related to filing monopoly charges against the company may become a major obstacle if matters develop into real legal issues.
“Despite the expected challenges, NVIDIA’s innovation and expansion, in addition to its leadership position in the market, support expectations of its continued positive performance in the short and medium term,” Saeed said.
- Nvidia reported $30.8 billion in its data center division, while analysts surveyed by StreetAccount expected $82 billion in revenue.
- Net income during the third quarter rose to $19.3 billion, or 78 cents per share, compared to $9.24 billion, or 67 cents per share, in the year-ago period.
- Nvidia’s gross profit margin rose to 73.5 percent, which is slightly higher than analysts’ estimates, according to a report by the American network CNBC.
- The company says the increase was due to the sale of more data center chips.
Rapid growth
In turn, technology expert, Mohammed Al-Harithi, said in exclusive statements to “Eqtisad Sky News Arabia” website: “NVIDIA is currently experiencing a period of rapid growth, driven by increasing demand for its chips used in artificial intelligence applications. The company has been able to achieve a huge leap in its value.” The market value exceeded $3 trillion, making it the largest company in the world (in terms of market value), followed by Apple and Microsoft.
He adds: The success achieved by NVIDIA today is mainly due to its advanced technologies, especially Blackwell chips, which provide significant improvements in the efficiency of artificial intelligence, making it a major choice for major companies. The company also strengthens its position through strategic partnerships with giant names such as Amazon, Microsoft, and OpenAI, as these companies rely on NVIDIA products to support cloud computing operations and develop generative artificial intelligence technologies.
He adds: The company is expected to continue its positive performance, as estimates indicate that the artificial intelligence processor market may grow to $280 billion by 2027, which enhances Nvidia’s chances of dominating this market.
But despite all this success, there are challenges that cannot be ignored, such as the escalation of competition from other companies and the delay in launching some new products. However, these factors have not yet affected the company’s momentum, according to Al-Harithi, who concludes his speech by saying: In general, it can be said that Nvidia’s future looks bright, with continued increasing demand for its advanced technologies, but any future changes that may affect this trend should be monitored.
Key factors
The academic advisor at San Jose State University, an expert in information technology from the United States, Dr. Ahmed Banafa, tells the website “Iqtisad Sky News Arabia: NVIDIA is one of the leading global companies in manufacturing graphics processing units (GPUs) and developing artificial intelligence technologies. Its current success The market is expected to continue thanks to a combination of key factors, with some challenges calling for attention.
He lists the reasons for NVIDIA’s continued success, as follows:
- Growing demand for AI: With the rapid growth of AI technologies, NVIDIA chips have become essential for powering data centers and processing advanced applications such as generative AI that includes tools like ChatGPT.
- Expansion in cloud computing: Major technology companies such as Amazon and Microsoft rely on NVIDIA technologies to develop cloud data centers, which enhances demand for their products.
- Technical leadership: NVIDIA continues to outperform its competitors by offering advanced products, giving it a strong competitive advantage in the market.
- Growing role in gaming industries: The expansion of the electronic gaming market and metaverse investments support the demand for the company’s high-performance graphics processors.
- AI applications in various fields: From self-driving cars to healthcare, NVIDIA technologies are used in numerous sectors, ensuring their continued growth.
Speaking of the gaming industry, Nvidia announced revenues of $3.28 billion in the gaming sector for the third quarter, compared to StreetAccount expectations of $3.03 billion.
As for the challenges that NVIDIA may face, they are – in Banafa’s estimation – the following:
- Strong competition: Rival companies such as AMD and Intel are developing similar chipsets at competitive prices, which may affect Nvidia’s market share.
- Geopolitical constraints: Tensions between the United States and China may limit the company’s sales in the Chinese market, which is one of the largest technology markets.
- Economic fluctuations: Any global economic slowdown may lead to a reduction in technology spending, affecting the company’s revenues.
- Reliance on specific sectors: NVIDIA’s heavy focus on data centers and the gaming industry makes it vulnerable to any potential slowdown in these sectors.
He concludes his speech by saying: NVIDIA’s current success is likely to continue thanks to its pivotal role in artificial intelligence technologies and its expansions in cloud computing and the gaming industry. However, continued success depends on its ability to innovate and meet the challenges ahead, whether competitive or geopolitical.
