Nvidia Corp. results showing that customers are binging on chips used in artificial intelligence computing sent a complex of stocks tied to the burgeoning technology soaring. Nvidia shares rallied 24% in morning trading.
Beyond semiconductor makers like AMD, Microsoft Corp. and Google parent Alphabet Inc. each rose about 2%. The tech giants have rallied this year as they incorporate AI tools into their products. Other gainers include software makers C3.ai Inc. and Palantir Technologies Inc., rising almost 5%.
Investors were looking to Nvidia for evidence that the surge in interest in artificial intelligence this year is resulting in higher sales of chips that provide the computing power. The semiconductor maker delivered that and more with a revenue forecast for the current quarter that dwarfed the average analyst estimate.
Nvidia forecast current-quarter revenue of $11 billion, plus or minus 2%. Analysts polled by Refinitiv are expecting revenue of $7.15 billion.
"Given the generative AI gold rush taking place, this should fuel demand for Nvidia's chips for the remainder of the year," said Edward Jones analyst Logan Purk.
Nvidia did not provide a full-year forecast on Wednesday, but Chief Financial Officer Colette Kress said the company had procured "substantially higher supply" for the second half of the year.
Adjusted revenue for the quarter ended April 30 was $7.19 billion. Analysts polled by Refinitiv were expecting revenue of $6.52 billion. The company's data center chip sales hit $4.28 billion, beating analyst estimates of $3.89 billion, according to segment data from FactSet.
Gaming chip revenue beat Wall Street expectations at $2.24 billion versus estimates of $1.97 billion, according to FactSet data.
Net income rose to $2.04 billion, or 82 cents per share, from $1.62 billion, or 64 cents per share, a year earlier. Excluding items, the company earned $1.09 per share in the first quarter, beating estimates of 92 cents.
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