Nvidia On the Mountaintop
It was only 11 months ago that I wrote an Article entitled Nvidia In the Valley; the occasion was yet another plummet in their stock price:
To say that the company has turned things around is, needless to say, an understatement:
That big jump in May was Nvidia’s last earnings, when the company shocked investors with an incredibly ambitious forecast; this last week Nvidia vastly exceeded those expectations and forecasted even bigger growth going forward. From the Wall Street Journal:
Chip maker Nvidia said revenue in its recently completed quarter more than doubled from a year ago, setting a new company record, and projected that surging interest in artificial intelligence is propelling its business faster than expected. Nvidia is at the heart of the boom in artificial intelligence that made it a $1 trillion company this year, and it is forecasting growth that outpaces even the most bullish analyst projections.
Nvidia’s stock, already the top performer in the S&P 500 this year, rose 7.5% following the results, which would be about $87 billion in market value. The company said revenue more than doubled in its fiscal second quarter to about $13.5 billion, far ahead of Wall Street forecasts in a FactSet survey. Even more strikingly, it said revenue in its current quarter would be around $16 billion, besting expectations by about $3.5 billion. Net profit for the company’s second quarter was $6.19 billion, also surpassing forecasts.
The results show a wave of investment in artificial intelligence that began late last year with the arrival of OpenAI’s ChatGPT language-generation tool is gaining steam as companies and governments seek to harness its power in business and everyday life. Many companies see AI as indispensable to their future growth and are making large investments in computing infrastructure to support it.
Now the big question on everyone’s mind is if Nvidia is the new Cisco:
I don’t think so, at least in terms of the near-term: there are some fundamental differences between Nvidia and Cisco that are worth teasing out. The bigger question is the long term, and here the comparison might be more apt…
