AI Boosts Nvidia’s Revenue, but Trade Restrictions Cause its Stock to Decline


Despite being the talk of the town lately, OpenAI was not discussed during the Nvidia earnings call.

Nvidia reported significant increases in revenue and net income as the market for the artificial intelligence (AI) chips it designs continued to soar. However, in after-hours trading, the company’s stock fell due to worries about trade restrictions.

The AI behemoth’s revenue surpassed estimates of $16 billion in the third quarter of its 2024 fiscal year, rising by 206% year over year and 34% from the previous quarter to exceed $18 billion. At $9.2 billion, its net income increased 49% from the previous quarter and 1,259% over the previous year.

Jensen Huang, the founder and CEO of Nvidia, stated, “Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI.” “Large language model startups, consumer internet companies and global cloud service providers were the first movers, and the next waves are starting to build.”

“Nations and regional CSPs are investing in AI clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries,” he stated. “All of Nvidia’s products—GPUs, CPUs, networking, AI foundry services, and enterprise AI software—are expanding at breakneck speed. The generative AI era is rapidly emerging.”

The export restrictions imposed by the US government are one obstacle Nvidia must overcome. Nvidia’s business may be negatively impacted as a result of the Biden administration’s announcement this year of restrictions on the export of cutting-edge chips to China and other nations of concern.

In order to sell certain cutting-edge chips to China, Vietnam, and a number of Middle Eastern nations, including but not limited to Saudi Arabia, the United Arab Emirates, and Israel, the company must obtain a licence from the Commerce Department under the export controls.

Colette Kress, chief financial officer of Nvidia, stated that the company intends to launch products that adhere to export controls in the coming months. However, she also pointed out that approximately 25% of sales in the company’s data centre segment—which brought in $14.5 billion in revenue in Q3—come from nations that are subject to the export controls.

“We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions,” she stated.

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