Nvidia’s Profit Up By 580%, Share Prices Jump By 7%

Nvidia, one of the biggest chip companies in the world, has made record-breaking sales this year, thanks to the increasing demand for AI. While the AI boom last year has benefited many tech companies, no one has benefited quite like Nvidia.

According to the earrings report revealed this Wednesday, the company made close to $12.3 billion in the last three months which is $1.4 billion more than the previous year's quarter, bringing its year-over-year profit to 769%.

This in turn brings the company's total profit for the last year (2023) 580% more than the previous year (2022).

Talking about this outstanding performance, Chief Executive Jensen Huang said Accelerated computing and generative AI have hit the tipping point.".

The company also posted the numbers from its fourth-quarter last year which had a gain of 265% year-over-year. These numbers are not only impressive but have also raced past all the estimations made by Wall Street analysts.

Nvidia has also become the most traded stock on Wall Street, leaving behind the likes od Tesla.

What Contributed To This Success?

It's not just the sale of the AI chips that contributed to the company's massive profit. As per reports, their data centers have also been quite in demand. In fact, it's the revenue from these data centers that majorly contributed to the profits, having grown by almost five folds this past year.

Nvidia is also among the top 5 most valuable companies in the US.

What mostly helped in the growth of its data centers is the partnership with Cisco, Google, and Amazon. Year-over-year gains increased by 409%, hitting $18.4 billion in the fourth quarter.

This success however did not come without constraints. Nvidia revealed that it has been really hard working under the trade regulations placed by the US on doing business with China which is not only the second-largest economy but also has a massive population. Missing out on Chinese customers is a huge blow to any business.

As per the company, the sale of data centers in China was particularly hampered as it significantly declined". Also, the US's restrictions on exporting advanced AI chips to China directly affect Nvidia's H800 and A800.

Several other obstacles in its supply chain also hindered its work. Yet, the company managed to make record-breaking sales.

Nvidia's Stock Prices Increases

Soon after the earnings reports were published, Nvidia's stock prices jumped up by 7% and that's not the first time. Nvidia's stock prices have been growing consistently throughout 2023. In fact, by the end of 2023, its share prices grew a total of 230%.

Nvidia'sperformance was so notable that Goldman Sachs analysts labeled its stocks as the most important stock on planet Earth.".

However, the shareholders aren't sure about how long the company can hold on to such massive profits and stock prices. With the growing competition in the industry and the multiple restrictions imposed by the US government, times ahead might be tough for the company.

The Wall Street analysts on the other hand don't think that the company has anything to worry about.

For starters, Nvidia, understanding the need for a workaround, has already started shipping alternative chips to China that don't violate the rules imposed by the US.

On top of that, CFO Colette Kress said that China represented a small percentage of their customer base for now. So even if things go South, their revenue can be expected to remain in the same range in this current quarter as well.

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