Nvidia (NVDA) continues to prove why it’s a top dog in AI, beating expectations and raising guidance to $11 billion for Q2 vs a previous $7 billion range expectations. As we’ve mentioned previously, Nvidia is not just “a chip” company that got lucky with blockchain and gaming during the pandemic. Look back only to last October during our Q3 investor call when NVIDIA was trading at $115. We then highlighted how far semi had fallen in general along with the belief that fears of Nvidia’s dependence on sales in China and gaming/crypto were overblown. To be fair, revenue for Q1 ‘23 was DOWN Y/Y due in part to gaming/blockchain (which they never really broke out from gaming).
Currently, Nvidia’s AI data center is leading the pack for revenue, but investors shouldn’t sleep on the growth to come within other application areas. We should expect the consumer sector to remain muted for a while until the next cycle warrants whether it’s a total replacement or an on-device local AI upgrade.
Surging Demand for AI Chips
The key takeaway here is that this positive news will likely drive AI stocks higher today because analysts significantly underestimated the surge in demand for AI chips. NVIDIA’s revenue guidance for the July ending quarter is nearly 50% above expectations. This also bodes well for numerous companies in the ROBO Global Artificial Intelligence Index (THNQ). THNQ should see an uplift across AI-enablers in cloud and data center technologies as this is a positive indicator for the space.
The movement occurring within the entire universe of artificial intelligence is incredible. Yes, Nvidia’s positive announcement is wonderful for investors, but it’s important to note that disruptive developments and growth are happening every single day in the field of AI. For those looking for exposure to not just the heavy hitters in the space but also the smaller companies powering so many of these technologies today, consider the THNQ index for global exposure to the leaders in AI.
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By: Zeno Mercer, Sr. Research Analyst