Nvidia is talk of the town at AI events leading into this week’s earnings
Nvidia founder and CEO Jensen Huang displays products on-stage during the annual Nvidia GTC Artificial Intelligence Conference at SAP Center in San Jose, California, on March 18, 2024.
Josh Edelson | Afp | Getty Images
At the start of last week, OpenAI’s technology chief personally thanked Nvidia CEO Jensen Huang for “bringing us the most advanced” chips needed to run the demo for a presentation the company delivered on its latest artificial intelligence models.
A day later, at Google’s annual developer conference, Alphabet CEO Sundar Pichai highlighted his company’s “longstanding partnership with Nvidia,” and noted that Google Cloud will be using the chipmaker’s Blackwell graphics processing units (GPUs) in early 2025.
And this week, Microsoft, which provides servers to OpenAI, will announce new AI advancements and features that were developed on the company’s massive clusters of Nvidia GPUs. The company is hosting its Build conference in Redmond, Washington.
Heading into its quarterly earnings report on Wednesday, Nvidia finds itself at the center of the action in technology, a position that’s become increasingly commonplace for the 31-year-old company, whose market cap has ballooned past $2 trillion this year.
Nvidia is expected to report year-over-year revenue growth in excess of 200% for a third straight quarter, with analysts projecting a fiscal first-quarter bump-up of 243% to $24.6 billion, according to LSEG. More than $21 billion of that is expected to come from Nvidia’s data center business, which includes all the advanced processors the company is selling to Google, Microsoft, Meta, Amazon, OpenAI and others.
Nvidia is squeezing so much profit out of its AI suite of products that net income is expected to be up more than fivefold from a year earlier to $13.9 billion.
The stock has soared 91% this year after more than tripling in 2023.
Dan Niles, founder of Niles Investment Management, compared Nvidia’s position in the AI boom to the “internet buildout” of the 1990s and Cisco’s role at the center in those days. Over a three-year stretch, Niles said, Cisco had several dramatic pullbacks, but ultimately increased 4,000% up to its peak in 2000. Nvidia will go through similar cycles, he said.
“We’re still really early in the AI build,” Niles told CNBC’s “Money Matters” on Monday. “I think the revenue will go up three to four times from current levels over the next three to four years, and I think the stock goes with it.”
Google, Amazon, Microsoft, Meta, and Apple are expected to shell out a combined $200 billion in capital expenditures this year, according to an estimate from Bernstein, with a huge portion of the spending going to AI-specific infrastructure like Nvidia chips.
Elsewhere, OpenAI is relying on Nvidia’s technology for its latest chatbot, GPT-4o. Meta announced plans in March to buy and build out computers that will include 350,000 Nvidia GPUs, costing billions of dollars, and CEO Mark Zuckerberg even swapped jackets with Huang and posed for a picture with the Nvidia CEO.
“If you look at today for the AI build out, who’s really driving that?” Niles said. “It’s the most profitable companies on the planet — it’s Microsoft, it’s Google, it’s Meta, and they’re driving this.”
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., arrives at an event in Taipei, Taiwan, on Thursday, Jan. 25, 2024.
Lam Yik Fei | Bloomberg | Getty Images
Prior to the recent AI boom, Nvidia was known as the primary maker of chips used for 3D gaming. About a year ago, the chipmaker gave investors their first clue that the company would see a period of historic growth, signaling to Wall Street that it would generate about 50% more in sales than what analysts expected in the July 2023 quarter.
Growth rates have since accelerated. But starting in the second quarter, expansion is expected to slow, with analysts anticipating significant deceleration in each of the next three periods.
“We just don’t know how long this investment cycle lasts and just how much excess capacity will be created over that time in case this AI thing doesn’t materialize as quickly as expected,” Bernstein analysts wrote in a note earlier this month.
That’s not to say that Nvidia is at risk of losing a ton of the AI chip business to rivals. Piper Sandler analysts expect it to keep at least 75% of the AI accelerator market, even as companies like Google build their own custom chips.
“We view the percentage of hyperscaler spend that is dedicated towards compute further rising in 2024 and 2025,” Piper Sandler analyst Harsh Kumar wrote in a note.
One question the company faces is how well the transition is going to its next generation of AI chips, called Blackwell, which are expected to ship later this year. Some worry there could be a lull as clients hold off on buying the older Hopper GPUs like the H100 in favor of Blackwell-based chips such as the GH200.
“To some degree, the setup has shifted,” wrote Morgan Stanley analyst Joseph Moore in a note on Monday. “Six months ago, short term expectations were very strong but there was anxiety about durability. Now, fresh on the back of hyperscalers talking up longer term spending expectations for AI, those longer term views are more positive, but there is anxiety about a pause in front of Blackwell.”
Samuel Boivin | Nurphoto | Getty Images
TikTok CEO Shou Zi Chew told employees on Thursday that the company’s U.S. operations will be housed in a new joint venture.
The entity is named TikTok USDS Joint Venture LLC, according to a memo sent by Chew and obtained by CNBC. As part of the joint venture, Chew said the company has signed agreements with the three managing investors: Oracle, Silver Lake, and Abu Dhabi-based MGX. He said that the deal’s “closing date” is Jan. 22.
Under a national security law, which the Supreme Court upheld in January, China-based ByteDance was required to divest TikTok’s U.S. operations or face an effective ban in the country. In September, President Donald Trump signed an executive order approving a proposed deal that would keep TikTok operational in the U.S. by meeting the requirements of a law originally signed by former President Joe Biden.
Chew noted that the new TikTok joint venture would be “majority owned by American investors, governed by a new seven-member majority-American board of directors, and subject to terms that protect Americans’ data and U.S. national security.”
The U.S. joint venture will be 50% held by a consortium of new investors, including Oracle, Silver Lake and MGX with 15% each. Just over 30% will be held by affiliates of certain existing investors of ByteDance, and 19.9% will be retained by ByteDance, the memo said.
The TikTok chief said the entity will be responsible for protecting U.S. data, ensuring the security of its prized algorithm, content moderation and “software assurance.” He added that the joint venture will “have the exclusive right and authority to provide assurances that content, software, and data for American users is secure.”
In addition to being an investor, Oracle will serve as the “trusted security partner” in charge of auditing and validating that it complies with “agreed upon National Security Terms,” the memo said. Sensitive U.S. data will be stored in Oracle’s U.S.-based cloud computing data centers, Chew wrote.
The new TikTok entity will also be tasked with retraining the video app’s core content recommendation algorithm “on U.S. user data to ensure the content feed is free from outside manipulation,” the memo said.
Chew noted that TikTok global U.S. entities “will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing.”
Under Trump’s executive order in September, the attorney general was blocked from enforcing the national security law for a 120-day period in order to “permit the contemplated divestiture to be completed,” allowing the deal to finalize by Jan 23.
WATCH: TikTok signs deal for sale of U.S. unit to joint venture
The VC arms of Google and Nvidia have invested in Swedish vibe coding startup Lovable’s $330 million Series B at a $6.6 billion valuation, the company announced on Thursday.
The news confirms an earlier story from CNBC, which reported on Tuesday that Lovable had raised at that valuation, trebling its valuation from its previous round in July, and that the investors included U.S. VC firms Accel and Khosla Ventures.
CapitalG, one of Google’s VC divisions, and Menlo Ventures led the round. Alongside Accel and Khosla, Nvidia venture arm NVentures, actor Gwyneth Paltrow’s VC firm Kinship Ventures, Salesforce Ventures, Databricks Ventures, Atlassian Ventures, T.Capital, Hubspot Ventures, DST Global, EQT Global, Creandum and Evantic also participated.
The fresh funds take Lovable’s total raised in 2025 to over $500 million.
“Lovable has done something rare: built a product that enterprises and founders both love,” said Laela Sturdy, managing partner at CapitalG in a statement accompanying the announcement.
“The demand we’re seeing from Fortune 500 companies signals a fundamental shift in how software gets built.”
Lovable’s platform uses AI models from providers like OpenAI and Anthropic to help users build apps and websites using text prompts, without technical knowledge of coding.
The startup reported $200 million in annual recurring revenue (ARR) in November, just under a year after achieving $1 million in ARR for the first time. It was founded in 2023 by Anton Osika and Fabian Hedin.
Vibe coding startups have seen big interest from VCs in recent times, as investors bet on their promise of drastically reducing the time it takes to create software and apps.
In the U.S., Anysphere, which created coding tool Cursor, raised $2.3 billion at a $29.3 billion valuation in November. In September, Replit hit a $3 billion price tag after picking up $250 million and Vercel closed a $300 million round at a $9.3 billion valuation.
The Micron logo is seen displayed at the 8th China International Import Expo.
Sheldon Cooper | Lightrocket | Getty Images
Micron Technology‘s stock jumped 15% after the company signaled robust demand for its memory chips and blew away fiscal first-quarter estimates.
During an earnings call with analysts, Micron, which makes memory storage used for computers and artificial intelligence servers, said data center needs have fueled greater demand for its products.
Micron said it expects the total addressable market for high-bandwidth memory to hit $100 billion by 2028, growing at a 40% compounded annual growth rate. Management also upped its capital expenditures guidance to $20 billion from $18 billion.
“We are more than sold out,” said business chief Sumit Sadana. “We have a significant amount of unmet demand in our models and this is just consistent with an environment where the demand is substantially higher than supply for the foreseeable future.
Micron topped Wall Street estimates for the fiscal first quarter and issued blowout guidance.
The company reported adjusted earnings of $4.78 per share on $13.64 billion in revenue, surpassing LSEG estimates for earnings of $3.95 per share and $12.84 billion in sales.
Revenues in the current quarter are expected to hit about $18.70 billion, blowing past the $14.20 billion expected by LSEG. Adjusted earnings are forecast to reach $8.42, versus expectations of $4.78 per share.
JPMorgan upped its price target on the stock following the results, citing the favorable pricing setup, while Bank of America upgraded shares to a buy rating.
Morgan Stanley called the results the best revenue and net income upside in the “history of the U.S. semis industry” outside of Nvidia.
“If AI keeps growing as we expect, we believe that the next 12 months are going to have broader coat tails to the AI trade than just the processor names and memory would be the biggest beneficiary,” analysts wrote.
WATCH: Micron shares spike on better-than-expected quarterly results
Micron year-to-date stock chart.
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