May 20 (Reuters) – Nvidia Chief Executive Jensen Huang sought to reassure investors that the world’s most valuable company can maintain its roaring growth with the help of a broad customer base, and that new products will help the company surpass its $1 trillion sales forecast for its flagship artificial intelligence chips.
Nvidia estimated revenue of US$91 billion in the second quarter the day before, with a margin of error of 2%, above analyst expectations of US$86.84 billion, according to forecasts compiled by LSEG. The forecast was released after the company reported its first quarter balance sheet with revenue of US$81.62 billion, also above the average estimate compiled by LSEG, of US$78.86 billion.
In a conference call with analysts on Wednesday, Huang said the company’s new ‘Vera’ core processors give it access to a new US$200 billion market. Nvidia expects to earn US$20 billion from sales of Vera chips by the end of this fiscal year, a figure that, according to Huang, was not included in the previous estimate of US$1 trillion for ‘Blackwell’ and ‘Rubin’ AI chips between 2025 and 2027.
“I expect Vera to be the second largest contributor to sales, behind only the $1 trillion worth of chips from Blackwell and Rubin,” Huang said. ‘All of our customers are really excited about Vera.’
But he admitted: ‘my impression is that we will have supply constraints throughout the life of the Vera Rubin’. He was referring to a technological platform that combines the two chips and will be launched later this year.
ABOVE EXPECTED
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Nvidia is investing heavily to ensure it doesn’t face supply chain issues during the global memory chip crisis. The company reported on Wednesday that its supply increased to $119 billion in the fiscal first quarter, up from $95.2 billion in the previous quarter.
Data center revenue for the quarter was $75.2 billion, compared to analysts’ average estimate of $72.8 billion.
In adjusted terms, the company earned $1.87 per share, compared to market estimates of $1.76.
Nvidia’s results are widely considered a barometer of the health of the AI market, as its chips are used in virtually every major data center in the world, powering the largest and most advanced AI models.
“Nvidia delivered yet another better-than-expected result, but at this point that’s pretty much priced in as it continues to beat expectations quarter after quarter,” said eMarketer analyst Jacob Bourne.
‘The question remains whether the company can convince investors that AI expansion is sustainable through 2027 and 2028, especially as the narrative turns to inference workloads and semiconductor competition from Google, Amazon, AMD and Intel.’
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Nvidia also announced a US$80 billion share buyback program the day before and will increase its quarterly cash dividend from US$0.01 to US$0.25 per share.
Investments in AI infrastructure continue to grow rapidly, with US technology giants including Alphabet, Amazon and Microsoft forecast to spend more than $700 billion on AI this year, a significant increase from the roughly $400 billion forecast for 2025.
On the call, Huang said he believes Nvidia will grow faster than these ‘hyperscale’ customers, pointing to a new customer subsegment in its data center business that includes AI-specific cloud companies. Sales to these customers were roughly the same as the big cloud players, but grew faster quarter over quarter.
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“We should grow faster than investment in hyperscale infrastructure,” Huang said.
Nvidia also unveiled cloud computing deals worth $30 billion the day before, an increase from the previous $27 billion, which the company said are aimed at aiding its research and development efforts.
