Nvidia's Wild AI Profit Won't Last Forever
Right now, Nvidia (NASDAQ: NVDA) is very nearly the only game in town for those wanting to run advanced artificial-intelligence (AI) workloads. The company's H100 data center GPUs are the gold standard, and nearly two decades of work building up the software ecosystem around its chips have given it an enormous advantage.
Demand for AI chips is so intense that Nvidia can charge essentially whatever it wants. The company's data center segment generated more than $10 billion of revenue in the fiscal second quarter, which ended on July 30, more than doubling from the first quarter. Overall gross margin was 70%, up from 44% one year prior, and adjusted earnings per share climbed 148% from the first quarter.
Despite these incredible results that beat analyst estimates by a mile and guided for even stronger revenue in the third quarter, the stock actually declined following the company's earnings report. One reason could be that investors don't believe that Nvidia's AI chip business will remain so lucrative as competition heats up.
Source Fool.com
