Nvidia Triples Quarterly Revenue, but Sales in China Are a Concern

A start-up driving the artificial intelligence revolution may be in turmoil, but the semiconductor supplier propelling its innovations seems to be getting only stronger.

On Tuesday, Nvidia continued its string of blistering quarterly earnings reports, driven by stellar sales for A.I. applications of chips called graphics processing units, or GPUs. Microsoft uses thousands of those chips to handle calculations for OpenAI, the generative A.I. startup whose chief executive, Sam Altman, was fired Friday and swiftly hired by Microsoft as the head of a new advanced research lab.

Nvidia said revenue for its third quarter, which ended in October, tripled from a year earlier to $18.1 billion, while profit surged nearly fourteenfold, to $9.2 billion. The sales figure was nearly $2 billion higher than the company had predicted in August and much higher than analysts expected.

The company’s lofty predictions since May have taken its market valuation above $1 trillion and provided evidence that Nvidia is reaping the biggest financial benefits among all companies chasing A.I. opportunities.

And the furious pace doesn’t seem to be slowing, with Nvidia stepping up production of a highly sought chip, the H100, that has been in short supply. Partly as a result, the company on Tuesday predicted sales of about $20 billion for the current quarter, well above analysts’ average estimates of just under $18 billion.

“We have significantly increased supply every quarter this year to meet strong demand, and expect to continue to do so next year,” Colette Kress, Nvidia’s chief financial officer, said during a conference call with analysts.

The company’s growth has exploded despite furious competition from other big chip makers, a number of start-ups as well as the in-house creations of some of its major customers. In the latest development, Microsoft last week introduced its first two homegrown chips, including a processor aimed at A.I. jobs.

But Nvidia’s decades-old partnership with Microsoft nevertheless seemed to get stronger. The two companies announced a deal last week to offer Nvidia’s extensive collection of A.I software through the Microsoft cloud service running on Nvidia GPUs. A huge supercomputer that the companies jointly developed also placed third in a semiannual ranking of the fastest systems in the world.

Jensen Huang, Nvidia’s chief executive, praised the companies’ relationship at a Microsoft event and said much more innovation was ahead.

“Generative A.I. is the single most significant platform transition in the history of computing,” he said. “It’s bigger than the PC. It’s bigger than mobile. It’s going to be bigger than the internet.”

The move by OpenAI’s board to fire Mr. Altman — followed by Microsoft’s move to hire him — introduces “a degree of uncertainty that could temporarily cause volatility in the generative A.I. marketplace, and Nvidia isn’t immune,” Jacob Bourne, an analyst with Insider Intelligence, wrote in a research note.

But other analysts said heavy spending by Microsoft and many other companies to buy Nvidia’s GPUs for A.I. tasks was likely to remain steady.

Mr. Huang said during the call with analysts that countries such as India, Sweden and France had moved to build specialized data centers for A.I. rather than rely on U.S. computing services.

“We see them being built out everywhere, in just about every country,” he said.

One headwind involves China and the impact of new U.S. export restrictions, which also affect Saudi Arabia and Vietnam. Several of Nvidia’s GPUs, including models it developed for China, can no longer be shipped there without an export license.

Nvidia expects sales to the affected countries to decline significantly in the fourth quarter, Ms. Kress said, though the shortfall will be more than offset by strong growth in other regions. The company is working on other chips that can be sold in China under the latest restrictions, she said.

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