Surge in Demand for AI Chips Boosts Nvidia Revenue, Triggers Share Price Surge

A leading US technology company, specializing in chips for artificial intelligence (AI) applications, has pleasantly surprised investors with a remarkable 100% increase in its quarterly revenue. Nvidia's shares skyrocketed by nearly 10% during after-hours trading in New York on Wednesday, exceeding analysts' expectations. To the delight of its shareholders, the company also announced a massive $25 billion share buyback initiative. The surge in revenue was primarily attributed to the growing popularity of generative AI technologies like ChatGPT, which possess human-like reading and writing capabilities. Nvidia, which achieved a record-breaking milestone in May by becoming the first chip manufacturer to reach a $1 trillion market value, is currently grappling with chip shortages that are impeding production. Industry experts predict that it may take until next year to address this issue and meet the high demand for its graphics processing units (GPUs). Apart from its own chips, Nvidia's revenue growth was also fueled by the integration of AI systems that utilize chips from various other manufacturers. During the second quarter, Nvidia reported an adjusted revenue of $13.51 billion, significantly surpassing Wall Street's forecast of $11.2 billion. The company also projected a third-quarter revenue of around $16 billion, an impressive figure compared to the average market estimate of $12.6 billion. Nvidia's outstanding performance in Q2 positively impacted other major tech stocks and AI-related companies, including Microsoft, Meta Platforms, and Palantir Technologies, whose share prices experienced notable increases during extended trading. Commenting on the company's success, Jensen Huang, Nvidia's CEO, highlighted that businesses worldwide are transitioning towards accelerated computing and generative AI. While analysts lauded Nvidia's dominant position in capitalizing on the AI trend, some cautioned that overcoming supply chain challenges and boosting production would be crucial to sustaining this growth trajectory.