Nvidia Sales Surge as AI Boom Lifts Earnings

Facts

• Nvidia shares rose in after-hours trading on Wednesday after the company surpassed estimates in both earnings and revenue for the second quarter of 2023 ending July 30.¹
• The company's shares rose by as much as 9% following a year-over-year sales growth of 101% to $13.5B in Q2 2023, higher than the $11.2B estimation by Wall Street analysts.²
• The company recorded profits of $6.2B — or $2.48 per share — over 900% higher than a year ago. Shares in Nvidia have more than tripled in 2023, with the company's value reaching over $1.2T.³
• The results follow the wider trend of deepening investment into artificial intelligence (AI), with Nvidia making up approximately 70% of AI microchip sales. Nvidia's chips power OpenAI's ChatGPT, as well as similar language tools produced by Microsoft and Google.⁴
• Nvidia CEO Jensen Huang described the transition to AI as "a new computing transition" on Wednesday. Huang stated earlier this month that the company's early investment into AI — portrayed as a "bet-the-company moment" — was "worth it."⁵
• Nvidia's shares rose 24% in a single day in May following its Q1 results. Nvidia has announced that it will raise its share repurchase plan by $25B, having already repurchased approximately $3.4B worth of shares this year.⁴

Sources: ¹CNBC, ²CNN, ³Associated Press, ⁴The Wall Street Journal, and ⁵ABC News.

Narratives

• Narrative A, as provided by MarketWatch. Years of investment into the AI sector are paying off for Nvidia, which continues to blow quarterly expectations out of the water. As companies continue to get serious over the rise of AI, the importance of Nvidia will only continue to grow. The technology industry is seeing a long-term transition toward the future, and Nvidia has positioned itself as an industry leader.
• Narrative B, as provided by Money Morning. The rise of Nvidia alongside the continued success of Microsoft, Google, and all others aboard the AI train, is both cause for excitement and concern. Investors must only look back to the infamous "dot.com bubble" for justification. While AI certainly holds opportunities for the future, tech sector booms and busts have certainly happened before.

Predictions