A ray of hope for AI: Nvidia remains market leader despite short-term uncertainties

In a surprising decline at the start of trading on Thursday, Nvidia shares took a hit after the company presented impressive quarterly figures benefiting from overwhelming demand for AI chips. However, these were overshadowed by a subdued forecast for short-term revenues. Analysts on Wall Street largely agree: Nvidia will maintain its leadership position in the market for so-called AI accelerators that drive significant technological advances, even if supply chain issues impair the ability to meet sustained demand. For the fourth fiscal quarter ending in January, Nvidia expects revenue of approximately $37.5 billion. This forecast slightly surpassed analysts' estimates of $37.1 billion and would represent the slowest growth rate in almost two years. Colette Kress, Nvidia's CFO, announced that deliveries of the new Blackwell chip series would soon begin but warned that supply chain issues could persist well into the coming year. Nonetheless, Nvidia's updated financial report contained positive news: Revenue increased by an impressive 94% to $35.1 billion, while net profit exceeded $19.3 billion. The revenue from the data center segment, which includes Nvidia’s main activity in the AI space, climbed 112% compared to the previous year to a record $30.8 billion, driven by demand for Hopper chips and the delivery of 13,000 new Blackwell chips. Nvidia CEO Jensen Huang told investors in a call late Wednesday that Blackwell chip production is in full swing. "Indeed, we will deliver more Blackwells this quarter than we had previously estimated," Huang said. Despite the supply issues, he emphasized the strong demand for the Blackwell. This long-term confidence apparently supports a series of price target adjustments by Wall Street analysts, including Toshiya Hari from Goldman Sachs, who raised his target by $15 to $165 per share.