During the fourth quarter earnings call on Wednesday, Nvidia Corporation NVDA CEO Jensen Huang expressed optimism about the company’s future, citing industry-wide transitions and the potential for continued growth in the data center business.
What Happened: During the earnings call, Huang highlighted the company’s strong position in the data center business, attributing it to the ongoing industry-wide transitions to accelerated computing and generative AI.
He stated, “Fundamentally, the conditions are excellent for continued growth calendar ’24, to calendar ’25 and beyond. And let me tell you why? We’re at the beginning of two industry-wide transitions and both of them are industry wide."
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Huang also spoke about the emergence of a new type of data center, which he referred to as AI generation factories, and the company’s diversification into new industries. "Basically, it takes raw material, which is data, it transforms it with these AI supercomputers that NVIDIA builds, and it turns them into incredibly valuable tokens."
He went on to explain saying, "These tokens are what people experience on the amazing ChatGPT or Midjourney or, search these days are augmented by that. All of your recommender systems are now augmented by that, the hyper-personalization that goes along with it," the Nvidia CEO stated.
Explaining further, Huang said, "The way it manifests into new markets is in all of the diversity that you’re seeing us in. One, the amount of inference that we do is just off the charts now."
"Almost every single time you interact with ChatGPT, that we’re inferencing. Every time you use Midjourney, we’re inferencing. Every time you see amazing – these Sora videos that are being generated or Runway, the videos that they’re editing, Firefly, Nvidia is doing inferencing," he added.
For the unversed, during the training stage, a developer provides their model with a carefully selected dataset to enable it to acquire a comprehensive understanding of the data it will analyze. Later, during the inference stage, the model is capable of generating predictions using real-time data to yield practical outcomes.
The company’s chief financial officer, Colette Kress, also noted that the fourth-quarter data center growth was driven by both training and inference of generative AI and large language models across various industries, use cases, and regions.
"We estimate in the past year approximately 40% of data center revenue was for AI inference," Kress said earlier during the call.
Why It Matters: Nvidia’s Q4 2024 earnings call comes on the heels of a strong financial performance, with the company reporting a revenue beat of $22.10 billion and a non-GAAP EPS of $5.16.
This exceeded optimistic forecasts and marked a 22% increase from the previous quarter.
Prior to the earnings call, it was reported that despite facing significant challenges from November 2021 to October 2022, Nvidia’s shares bounced back due to increased demand for artificial intelligence and gaming.
This recovery led to a 529% increase in the stock price, showcasing Nvidia’s strong position in cutting-edge sectors.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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