Shares of Nvidia jumped more than 12% Thursday, rising to 10-month highs as a combination of bullish factors influenced the company.
Battle for business clients
Nvidia revealed a new AI “supercomputer” known as Nvidia DGX, which enables corporate clients to access AI-related technologies via cloud computing providers such as Microsoft, thereby establishing a new market for “AI-as-a-service” for thousands of firms worldwide.
Its capacity to handle the current AI investment boom, inspired in part by the introduction of the ChatGPT chatbot earlier this year, may place Nvidia at the forefront of a market that might be worth more than $600 billion.
Chips sector getting a government boost
The Biden administration is presenting fresh specifics on how it intends to maximize the impact of the billions it has available to stimulate the U.S. semiconductor industry.
The construction of at least two semiconductor manufacturing and research centers in the United States will be the focus of the plans that Commerce Secretary Gina Raimondo will reveal in a speech on Thursday. She expects that these locations would generate momentum for the sector even when the government money has gone out.
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According to parts of her speech released in advance, Raimondo will connect the initiative to significant times in US history and state that “the CHIPS and Science Act gives us a chance to make investments that are as vital for the future of our nation.”
Earnings pleased investors
Earlier this week, Nvidia’s reported bottom line for the fourth quarter was 88 cents per share, down 33% from the same period a year earlier but above Wall Street’s expectations by around 7 cents. The chipmaker reported revenue of $6.05 billion, again above analysts’ projections due to significant improvements in its gaming chip sector.
Nvidia predicted that sales would increase 7.4% consecutively to $6.5 billion, while gross margins would improve 80 basis points (0.8 percentage points) to about 64.1%.
Revenue from data centers increased by 11% year-over-year to $3.62 billion. Still, it decreased by approximately 6% from the preceding quarter due to a decline in cloud investment and the Covid interruptions in China.
The company’s gaming revenue increased 16% from the previous quarter to $1.83 billion but was still down more than 47% from the same period a year earlier, due in part to an increase in demand for its RTX 40 Series GPUs.
Nvidia 5 minute chart, source: author´s analysis, tradingview.com