© Reuters. A smartphone with a displayed NVIDIA logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/file photo
By Chavi Mehta, Max A. Cherney and Stephen Nellis
(Reuters) -Chip designer Nvidia (NASDAQ:) on Wednesday forecast third-quarter revenue above Wall Street targets and said it will buy back $25 billion more of its shares as sales benefit from soaring demand for its chips that power nearly all the world’s major artificial-intelligence apps.
Shares of the Santa-Clara, California-based company rose 6.3% in trading after the bell.
Nvidia shares have tripled this year, making the company the first ever trillion-dollar chip business as investors bet Nvidia will be the key beneficiary of the AI boom.
Analysts have estimated that demand for Nvidia’s prized AI chips is exceeding supply by at least 50%, adding that the imbalance will stay in place for the next several quarters.
“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” Jensen Huang, Nvidia’s chief executive, said in a statement.
From AI startups to major cloud services providers like Microsoft (NASDAQ:), all are looking to get their hands on more Nvidia chips. Demand from China is also in overdrive, as companies there are placing rush orders to stockpile chips before any further U.S. export curbs come into action.
The company forecast third-quarter revenue of about $16 billion, plus or minus 2%. Analysts polled by Refinitiv on average were expecting $12.61 billion.
Adjusted revenue in the second quarter was $13.51 billion, compared to estimates of $11.22 billion.
Revenue at the company’s data center business rose 141% to $10.32 billion in the quarter ended July 30, beating analyst estimates of $7.69 billion by more than $2 billion, according to Refinitiv data.
Nvidia’s report lifted the shares of other Big Tech stocks and AI-related companies, with Microsoft jumping 2.4%, Meta Platforms (NASDAQ:) up 1.2% and Palantir Technologies (NYSE:) surging 4.2% in extended trading.