Nvidia stock rises on growth forecast, drives market surge on renewed AI interest

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artificial intelligence (AI) chips, has projected a significant threefold increase in quarterly revenue, surpassing market expectations and propelling its shares up by 10 percent in after-hours trading, Reuters reported. The robust demand for Nvidia's data centre chips and graphics processing units (GPUs) continues to rise as companies strive to expand their AI capabilities, it added. Nvidia's silicon maintains dominance in the global AI chip market, with Microsoft among its prominent clients.

Nvidia has reported better-than-expected quarterly revenue for the first three quarters of 2023, exceeding analyst estimates by 10-20 percent. The company forecasts a first-quarter revenue growth of 233 percent, surpassing Wall Street's expectations of 208 percent growth. The late-day surge in Nvidia's stock has boosted the company's market capitalisation by over $129 billion.

This positive momentum has also impacted other AI-related firms, including Arm Holdings, contributing to a combined increase of $160 billion in stock market value. While Nvidia's financial outlook remains optimistic, some analysts question the sustainability of its rapid growth, the report said. The company anticipates first-quarter revenue of $24.0 billion, plus or minus 2 percent, exceeding the average analyst expectation of $22.17 billion.

Sales in Nvidia's data centre segment, the largest by revenue share, surged by 409 percent to $18.4 billion in the fiscal fourth quarter, surpassing estimates, as per LSEG data. However, concerns persist about the company's ability to meet the soaring demand for its chips in the short term. Nvidia's supply chains, strained by high demand, are gradually improving.