Another huge quarterly profit announced by chipmaker Nvidia on Wednesday provided strong evidence that Silicon Valley's AI spending spree is still gathering steam.
Nvidia said profits in its most recent quarter were $58.3 billion, up 211 percent from a year earlier and beating financial analysts' expectations. Just three years ago, the Silicon Valley company's quarterly profit was $2 billion, about one-thirtieth of what it is today.
Nvidia chips are an essential part of big AI projects, and other tech companies have been preparing to spend tens of billions of dollars on those chips. Nvidia is now the most valuable publicly traded company in the world and its financial results have become a benchmark for the technology industry.
Nvidia's biggest problem appears to be meeting demand from its spendthrift customers in the tech industry, a strong indication that the AI boom is going strong. On Wednesday, the company said annual spending on AI infrastructure would reach $3 trillion to $4 trillion in 2030, up from about $1 trillion today.
It was the second consecutive quarter that Nvidia's profits doubled, and the second time the chip company posted higher profits than other tech giants like Apple. Revenue for the quarter was $81.6 billion, up 85 percent from a year earlier, also exceeding expectations.
Nvidia also reassured Wall Street about its future. The company projected that sales in the current quarter would nearly double from last year, to $91 billion. That surpassed Wall Street's prediction of $86 billion. Nvidia's share price fell 1 percent in after-hours trading, giving up most of its gains from earlier in the day.
The company's CEO, Jensen Huang, said the construction of data centers, which he calls AI factories, had accelerated because “AI can now do productive and valuable work.”
“Demand has gone parabolic,” he said during a call with Wall Street analysts. “We got ahead of this moment so that when agent AI arrived, Nvidia would be ready. It has arrived.”
More than a decade ago, Huang pushed his company, which made chips used primarily for video games, to develop software and chips to build AI. Its bet helped Nvidia gain control of more than 90 percent of the market for cutting-edge semiconductors that power AI projects.
Nvidia's sales have been boosted by the tech giants' belief that AI will usher in the next industrial revolution, and Google, Amazon, Meta, Microsoft and others have committed at least $1 trillion to building AI data centers. Those data centers are packed with Nvidia chips.
It's no surprise that data center sales now drive Nvidia's business. In the most recent quarter, the company said, data center revenue rose 92 percent to $75 billion, nearly all of its sales during the period.
Huang said this week that new AI assistants known as agents were spurring more spending on AI. That spending is starting to boost the entire chip industry.
AMD and Intel have increased sales of traditional server chips, which can satisfy some AI queries. Cerebras, an AI chip manufacturing startup, went public this month. And Google, which makes custom AI chips known as tensor processing units, has started selling them to rivals.
“If you run an AI business, you're going to pick any chip you can get because there's a lot more demand than you can handle,” said Daniel Pilling, a portfolio manager at Sand Capital, an investment firm.
Nvidia has responded to increased competition with new products. In March, it unveiled an artificial intelligence system using technology it licensed from a startup called Groq. The product, which combines Nvidia and Groq chips, more efficiently fulfills AI requests through a process known as inference.
The chipmaker has also begun using its growing cash reserves to buy critical components and invest in startups. The company spent $95 billion in the previous quarter to secure the memory, fiber optics and other supplies it needs to make its artificial intelligence supercomputers.
In February, it also invested in Anthropic, one of the fastest-growing artificial intelligence companies in the world. Huang has said Anthropic will begin using more Nvidia chips.
But it has been unable to execute one of its top priorities: selling chips in China.
After the Trump administration banned sales to China last year, Huang convinced it to change course and allow Nvidia to sell its second-most powerful chip to Chinese companies. But China has refused to allow its companies to buy Nvidia technology and has instead pressured them to use domestic chipmakers like Huawei.
This month, Huang traveled to Beijing on Air Force One with President Trump. He said he had not raised the issue with Chinese officials. He is optimistic that the situation will change.
“The Chinese government has to decide how much of its local market it wants to protect,” Huang said on Bloomberg TV on Monday. “My feeling is that over time the market will open up.”
