Author | Zhang Yao
Source | Zero state LT (ID: LingTai_LT)
In the early morning of February 21, 2024, Nvidia announced its performance in the fourth fiscal quarter of the 2024 fiscal year as of January 28, 2024: revenue increased by 265% year on year, earnings per share increased by 765% year on year, setting a record for three consecutive quarters. This amazing "report card" dispelled market doubts at one fell swoop. On February 22, local time, the three major indexes of U.S. stocks rose across the board, The market value of Nvidia is also close to $2 trillion,
Behind this, it benefits from the strong growth of AI big model and Sora.
In November 2022, ChatGPT was born. As a big language model applied in dialogue scenarios, it can interact with users in a more human friendly way, answer questions, admit mistakes, challenge incorrect premises, reject inappropriate requests, and have amazing thinking chain reasoning ability and zero sample problem processing ability.
In terms of understanding human intentions, accurately answering questions, and smoothly generating results, it is far more than human expectations. Almost "omnipotence" makes the industry instantly boiling. Large factory people have joined the AI big model entrepreneurial army, and even transitioned to the gold rush of small factories and many entrepreneurs.
If the big model is a gold rush, Nvidia is a shovel seller.
Technology tycoons, start-ups and Middle East local tycoons gave Nvidia a lot of money and replaced it with AI chips to develop large models.
It is not important whether the big model is a gold mine or not, but whether there is a shovel in hand is very important. As the provider of underlying computing power, Nvidia benefits from the big model arms race. The crowd looted, making it "hard to get a shovel", and Nvidia was pushed to the altar.
It is extremely dangerous to push the enterprise to the altar by this emotion, which means that every move of Nvidia will be viewed in a magnifying glass, which is more popular than storms in other fields.
As the most beneficial enterprise under the generative AI boom, Nvidia's performance largely reflects the current development situation and future trend of the AI industry.
After almost exponential growth in the past few years, the performance of NVIDIA's share price in the market has become polarized. Some people believe that the short-term bubble has formed, and Nvidia is likely to have reached the peak of the stage. Others believe that the era of generative AI has just begun. As the only provider in the high-end GPU market, Nvidia still has a huge growth space in the future.
The whole AI circle is almost "kidnapped" by Nvidia.
Nvidia's share price has been rising, driving the AI carnival to continue; As long as its performance continues to exceed expectations, it proves that AI is not completely a bubble. This makes Nvidia's quarterly financial report a watershed. It can either end this wave of AI carnival and turn the global AI stock downward, or continue to add fuel to the flames and reach new heights.
Computing power is productivity. Nvidia brings together all people's beliefs about AI.
Understand the dividend of AI big model
Data center business is advancing rapidly
According to the financial report data released by Nvidia on the same day, according to the US GAAP, the fourth quarter revenue was 22.1 billion US dollars, up 265% year on year, and the net profit was 12.285 billion US dollars, up 769% year on year. These two key indicators both exceeded market expectations.
The performance of specific business can best reflect the operation and development of the company.
Among the revenue structure of each part, the most striking part of Nvidia's financial report this time is the growth of data center business (AI computing related revenue is included in the data center), which shows that the demand for AI related business is still strong.
According to the financial report, the fourth quarter revenue of the data center reached a record $18.4 billion, an increase of 27% over the previous quarter and 409% over the same period last year. The annual revenue increased by 217% to a record $47.5 billion. Both single quarter and full year revenue reached a record high.
Nvidia CFO Chris said in the financial report analysis that "the revenue of the data center in the fourth fiscal quarter was mainly driven by generative AI and its related training. We estimate that about 40% of the data center revenue in the past year came from AI."
Although the inventory has increased, compared with the high growth income, the proportion of inventory/income is still declining, which shows that the product is still in short supply.
The high growth of Nvidia is indeed the breakthrough and demand of this wave of AI, which is brought about by the continued increase of investment in infrastructure. The infrastructure of AI is developed around Nvidia. Huang Renxun, CEO of Nvidia, also said in a statement after the financial report that "accelerated computing and generative AI have reached a critical point. Companies, industries and countries around the world are surging in demand for this."
Bright financial data is bound to inject confidence into the market, and share prices will also benefit in the short term. With the positive financial report, Nvidia shares, which had fallen for four consecutive days, soared again after the day's trading. On the evening of February 22, Beijing time, after the opening of the U.S. stock market, Nvidia's share price soared by 15%. By the end of the day, Nvidia had reported $785.38, up 16.4%, and its market value was close to $2 trillion, the third highest after Microsoft and Apple.
Although Nvidia's share price has more than quadrupled since the beginning of last year, it has been supported by performance in this process. Even though the current market value has reached more than 1.6 trillion yuan, driven by the data center and AI model, the PE corresponding to the current market value of the company is still less than 40 times.
This resurgent market makes Huang Renxun about to achieve his new breakthrough: becoming one of the 20 richest people in the world. Huang Renxun's wealth jumped by $8.5 billion to $68.1 billion on Thursday. This change will enable him to surpass Charles Koch and Chinese drinking water tycoon Zhong 睒睒睒睒 and rise to the 21st place in the Bloomberg Billionaire Index. This is a great promotion for Nvidia's co-founder, because he only ranked 128th with a net asset of US $13.5 billion at the beginning of last year.
Nvidia's surge also led to a surge in the US stock index. The NASDAQ rose 460.75 points, or 2.96%, close to an all-time high, a new closing high since November 2021. The Dow rose 1.18%, and the S&P 500 rose 2.11%, both of which hit a record high.
be too highbrow to be popular
Other business growth was flat
Compared with the data center business, other businesses performed mediocrely.
NVIDIA's main business, including notebook computers and personal computer graphics cards, generated only $2.87 billion in gaming revenue, up 56% year on year.
In the fourth quarter, the game business achieved a revenue of $2.9 billion, up 56% year on year, and the annual revenue reached $10.4 billion (the growth of the data center business still compressed its proportion in the company's revenue). Introduced GeForce RTX ™ 40 SUPER series GPU, and provides generative AI function, supporting more than 100 million RTX AI PCs. It also released the microservice of NVIDIA Avatar Cloud Engine, allowing game and application developers to integrate the generative AI model into non playable characters. Through NVIDIA DLSS, ray tracing and other technologies, Nvidia has achieved the milestone of 500 AI supported RTX games and applications.
In terms of professional visualization, NVIDIA's revenue in the fourth quarter reached $463 million, a year-on-year increase of 105%, and the annual revenue reached $1.6 billion. NVIDIA RTX 2000 Ada Generation GPU was released, bringing the latest artificial intelligence, graphics and computing technologies to compact workstations.
In the automotive sector, the fourth quarter revenue was $281 million, up 8% month on month, and the annual revenue reached $1.1 billion. Nvidia further adopts NVIDIA DRIVE ® The platform cooperates with Great Wall Motors, ZEEKR and Xiaomi to provide power for the intelligent automatic driving system.
Although Nvidia has not yet found a perfect second growth curve, for an enterprise, if the main business has a rapid momentum, other businesses will not have a big impact on the company's overall earnings even if there is nothing remarkable. So at present, Nvidia does not have a "bucket effect".
For the time being, Nvidia doesn't have too many "internal worries", but "external problems" keep rising. First of all, in the fourth fiscal quarter, the Chinese market accounted for a single digit percentage of Nvidia's data center revenue. In the past, data center business revenue from China and other restricted countries and regions accounted for 20% to 25% of the company's overall revenue. At the financial report briefing, Nvidia CFO Klaette Kress warned that due to the licensing requirements of the United States, the data center revenue from China in the fourth quarter fell "significantly".
At the same time, recently, companies such as Sun Zhengyi and Groq have announced to enter the AI chip field, and Nvidia has encountered a "roadblock". As an American AI chip enterprise, Groq recently launched its latest large model reasoning chip LPU. According to test data, Groq's LPU reasoning speed is 10 times faster than Nvidia GPU, while its cost is only 1/10 of that.
From Wensheng text to Wensheng map to Wensheng video
How long can Nvidia go crazy
The seven stocks with the largest market value in the US stock market: Apple, Microsoft, Nvidia, Amazon, Meta, Google and Tesla play an important role in the market. The total market value of these seven stocks together has accounted for 30% of the total market value of all constituent stocks of the S&P 500.
Since last year, the sharp rise of these seven stocks has partly covered up the fact that most of the US stocks performed mediocrely. Since the end of 2022, the growth of these seven stocks has exceeded 60%, and the growth of the remaining 493 constituent stocks of the S&P 500 index has barely exceeded 20% in the same period. Since the composition of the S&P index is weighted by market value, the S&P index also gained more than 30% growth in the same period, driven by the stocks with the largest market value.
Among the seven stocks, Nvidia is far ahead in terms of growth, with an increase of more than 400% in less than two years from the end of 2022.
The main driving force behind this round of sharp rise in technology giant stocks is the expectation of a new round of artificial intelligence. This period coincided with the release of the epoch-making AI dialogue product ChatGPT by OpenAI. The AI field entered a new era of generative AI, and investors began to make large bets on companies related to this field. Among them, Nvidia, as the only provider of high-end GPUs required for in-depth learning and training in the market, became the target of funds, In recent years, the stock price has made an astonishing increase. In the whole year of last year, Nvidia's share price rose by more than 200%, successfully entering the ranks of clubs with a market value of trillion dollars.
In the early morning of February 16, 2024, AI will brush the screen again.
Sora, the big model of Wensheng video released by OpenAI, has contributed a "hot" visual feast for everyone: welcome the Spring Festival of the Dragon Year, and the men, women, and children chasing the dragon dance team are jubilant; On the street of Tokyo after the rain, a fashionable lady shuttled on the neon shining street... As long as the corresponding prompt text was input, Sora could generate relevant videos of up to one minute in "one second", which could not only realize the natural switching of multi angle shots, but also create complex scenes and dynamic character expressions.
What is "something out of nothing"?
Sora Wensheng's video is nothing. People can't help sighing: "too amazing", "too cracked", "this is impossible"; At the same time, video blurs the boundary between the virtual world and the real world, which makes people worry that "seeing is not necessarily believing".
AI has never stopped evolving, nor has it stopped bringing surprises to humans. From Wensheng articles, Wensheng maps to Wensheng videos, from ChatGPT, Dall-E to Sora, generative AI leaped over barriers and soared all the way, showing people the imagination and explosive power beyond boundaries in the era of artificial intelligence.
Some people say that the picture of the new world is slowly emerging. What kind of new world will this be? Elon Musk, CEO of Tesla, sighed that Sora has made "human willing to gamble and lose". Zhou Hongyi, founder of 360, believes that the birth of Sora means that the realization of AGI (General Artificial Intelligence) may be shortened from ten years to one or two years.
Nvidia's growth theory relies on generative artificial intelligence, which is a major trend of science and technology, making the demand for its advanced hardware soar. With the launch of large models such as Sora and Gemini 1.5, and the gradual landing of many applications based on the large model, the shortage of AI chips will continue.
The investors are investing in the future and looking forward to it.
Whether Nvidia's myth can continue or not depends on its future performance forecast. Nvidia's guidance for the next quarter is also quite good. It is expected that the revenue will reach $24 billion and the gross profit rate will reach 76.3%, a new high. Compared with the downturn guidance of Intel and AMD, Nvidia's data center and AI business continued to grow at a high speed, demonstrating its strength in the field of AI chips.
Some people believe that AI can turn stone into gold, while others believe that AI promotes bubbles. None of this matters to Nvidia. It is like an arms dealer. As long as the arms race continues, it will be profitable.
(Statement: This article only represents the author's view, not Sina.com's position.)
