Nvidia’s profit rises 65% to US$31.9 billion; Is it enough for Wall Street?

Just three weeks ago, Nvidia became the first publicly traded company to be worth more than $5 trillion, thanks to the cutting-edge computer chips it makes for artificial intelligence.

This Wednesday (19), Nvidia remembered how much the world wants these chips. The company reported that in its most recent quarter, its profit was $31.9 billion, an increase of 65% from the previous year and 245% from two years ago. Among the tech industry giants, only Google’s parent company, Alphabet, made a higher profit in the same quarter.

Nvidia controls about 90% of the market for chips used in AI projects, and its financial performance has become a key indicator for the technology sector, which is investing trillions of dollars in large data centers around the world.

Nvidia’s impressive profit could be enough to calm nerves on Wall Street, where there are growing concerns that excessive spending is far ahead of demand for the products and services Silicon Valley engineers are developing.

The S&P 500 index has fallen 3.6% since Nvidia, the world’s most valuable publicly traded company, hit the $5 trillion mark. Nvidia shares are down 10% in that time, although they are still up 34% year to date.

Nvidia has become a prime example of a U.S. economy split into two markets: Tech stocks have soared on the AI ​​boom, while several consumer-dependent companies have slowed.

Hours before Nvidia released its results, Target said holiday sales would be slower than last year and added that factors such as the government shutdown and pause in food assistance had affected its business.

Nvidia has experienced accelerated growth since the start of the AI ​​boom three years ago, and the most recent quarter was no different. In the three months ending in October, the company said sales of its AI data center chips rose 44% to $51 billion. This deal helped increase the company’s total revenue to US$57 billion, exceeding Wall Street’s expectations of US$55.2 billion.

“There’s been a lot of talk about an AI bubble,” said Jensen Huang, the company’s CEO and co-founder, during a call with analysts. The AI ​​that Nvidia is helping other companies create, he added, is “transformative.”