Nvidia Seeks to Reassure Investors Amid Rising Supply Concerns for AI Chips
As the global demand for artificial intelligence (AI) technology continues to surge, chipmaker Nvidia is working to alleviate concerns about its ability to meet the growing need for AI chips. Speaking at the UBS Global Technology and AI Conference in Scottsdale, Arizona, Nvidia’s CFO Colette Kress emphasized that the company is not experiencing any slowdown in demand, despite supply pressures on its latest graphics processing unit, Blackwell.
The Rise of AI Giants
Nvidia has become a driving force behind the growth of AI giants such as Microsoft, Google, Meta, and Elon Musk’s xAI, with its market capitalization reaching a staggering $3.4 trillion. The company’s graphics processing units (GPUs) are a crucial component of AI systems, designed to perform rapid calculations. As AI models continue to grow in size and complexity, Nvidia’s GPUs are in high demand.
Supply Constraints Ahead
Despite Kress’s optimistic tone, she acknowledged that Nvidia is facing supply constraints on its Blackwell chip, which is expected to continue into the next fiscal year. However, she emphasized that this does not imply a slowdown in demand. In fact, the company is shipping more Blackwell chips than anticipated, and is working to improve supply chain efficiency for its AI chips.
Financial Performance
Nvidia reported impressive financial results for its third quarter of fiscal year 2025, with net income reaching $19.3 billion, up 109% year over year. Revenue also soared to $35.1 billion, up 94% year over year. The company projects revenue of approximately $37.5 billion for the following quarter.
Cash Flow Plans
UBS analyst Timothy Arcuri asked Kress about Nvidia’s cash flow plans, noting that the company has generated about $56 billion in cash flow over the past four quarters. Kress revealed that Nvidia is considering mergers and acquisitions, as well as new business opportunities, to utilize its excess cash. This could lead to new business models and a focus on emerging areas of AI.
Competition and Challenges
While Nvidia dominates the AI chip market with an 80% share, it still faces challenges from competitors such as Advanced Micro Devices, which expects to see AI chip sales of $5 billion this year. Additionally, large customers like Microsoft have been working on developing their own AI chips, posing a potential threat to Nvidia’s market share.
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