Chipmaker Nvidia forecast first-quarter revenue above market estimates on Wednesday, betting on Big Tech’s unabated spending on its artificial intelligence processors amid widespread scrutiny of massive AI investments.
Shares of Nvidia rose over 2% in extended trading.
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The world’s most valuable company expects fiscal first-quarter sales of $78 billion, plus or minus 2%, compared with analysts’ average estimate of $72.60 billion, according to data compiled by LSEG.
Investors are looking to Nvidia’s results to gauge whether the hundreds of billions of dollars that Big Tech is pouring into data center infrastructure are paying off.
Wall Street has been betting on signs of robust demand for Nvidia’s top-of-the-line AI chips, an assumption backed by hefty capital expenditure from Alphabet, Microsoft, Amazon.com and Meta Platforms, expected to total at least $630 billion in 2026, with most of the spending earmarked for data centres and processors.
Businesses and governments are spending relentlessly in the race to develop the most sophisticated AI tech, or risk falling behind.
But signs of risk to Nvidia’s long-held dominance in making AI chips are emerging. Smaller rival AMD is set to unveil a new flagship AI server later this year and has clinched deals with Nvidia’s top customers, including Meta.
Meanwhile, Alphabet’s Google has emerged as a top rival with a deal to provide Claude chatbot creator Anthropic with its in-house chips called TPUs. Google is also in talks to supply Meta, according to media reports.
Big Tech is increasingly turning inward in the quest for more computing power, dedicating resources to designing in-house chips that they are deploying in their data centres.
The company reported January-quarter sales of $68.13 billion, beating estimates of $66.21 billion, according to LSEG data. It said adjusted profits came in at $1.62 per share, compared with estimates of $1.53 per share, according to LSEG data.
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