DI25001 Nvidia V01 100725

 NVIDIA

First-quarter sales growh 69%

First-quarter net income $18.8bn

Jensen Huang, Nvidia’s chief executive, was taken to dinner at Nobu Palo Alto by Larry Ellison and Elon Musk, the world’s richest man, in September.

“I would describe the dinner as Oracle, me and Elon begging Jensen for GPUs,” Ellison later told analysts. “Please take our money. Please take our money. By the way, I got dinner. No, no, take more of it. We need you to take more of our money please.”

Nvidia has positioned itself as the most important supplier in the artificial intelligence revolution. The maker of graphics processing units, first developed for video gaming, has recorded extraordinary results since the launch of ChatGPT in late 2022.

Demand for Nvidia’s chips leapt, with sales led by its H100 design, which can run the large-language models that power generative AI programs such as ChatGPT.

The technology propelled Nvidia’s valuation above $1 trillion for the first time in June 2023. Last year, it raced past the $2 trillion mark in February and $3 trillion in June.

Yesterday its valuation surpassed $4 trillion in intraday trading, the first public company to do so.

Investors have shaken off worries from January when Deepseek, a Chinese artificial intelligence startup, said it was even more efficient than OpenAI, the owner of ChatGPT, and had tech that was just as powerful but ran on fewer chips.

Huang has dismissed concernsabout chip demand, saying demand for computing power to handle reasoning and agentic AI applications, with more decision making power and autonomy, will be higher than anticipated. “The amount of computation we need ... as a result of agentic AI, as a result of reasoning, is easily a hundred times more than we thought we needed this time last year,” he said in March.

Microsoft, Amazon, Alphabet and Meta Platforms have remained committed to investing billions of dollars to build AI networks.

This week, Bernstein research estimated that total investment in planned new data centres driven by AI demand had risen to $750 billion — a positive signal for Nvidia, which offers the full computing “stack” required for AI, including hardware systems and the software needed to optimise their performance.

Nvidia continues to innovate with more powerful chips that can perform the complex tasks required by generative AI platforms. The Hopper H100 is being replaced by the Blackwell range, which allows two and a half times Hopper’s performance in training AI.

In the first quarter to April 27, Nvidia reported revenue of $44.06 billion, up 69 per cent, above estimates of $43.3 billion. Net income rose 26 per cent to $18.8 billion, above estimates of $18.2 billion. Analysts expect Nvidia to report sales of $45.6 billion for the second quarter, up 52 percent on the same period last year. Net income is forecast to rise 47 percent to $24.4 billion.

Nvidia was forced to write off inventory earmarked for China in April when the Trump administration put export limits on its H20 chip, designed for the Chinese market. The company said the new restrictions would result in $5.5 billion in charges. The charges meant that Nvidia’s profit margin fell from 73 per cent to a still-impressive 60.5 per cent in the last quarter.

Analysts say Nvidia can grow by expanding in other markets.

Atif Malik, an analyst at Citi, raised his price target for Nvidia stock to $190 from $180 this week, citing higher demand for AI, as governments invest heavily in the technology. Malik expects sovereign AI demand to drive the total addressable market for data-centre semiconductor AI to more than half a trillion dollars by 2028.

Nvidia’s earnings multiple has already deflated from two years ago, when it peaked at 209 in July 2023. It has since fallen to 53.

At some point demand for GPUs will start to become saturated. But experts believe there will be several years of more growth ahead.

Investors should expect volatility driven by geopolitics, tariffs and product transitions but Jon Peddie, a former Nvidia adviser, said: “There’ll be a levelling off once enough people get enough GPUs, but that won’t be for quite a while. Our guesstimate is we’ve still got two to three years of ridiculous growth ahead of us, and then it’s going to roll off, but slowly.”