Nvidia forecasts 70% sales growth next year, signals AI spending boom has years ...

Nvidia has forecast a substantial 70 percent increase in revenue for the next fiscal year, reflecting the unrelenting demand for AI computing power. However, the chip maker has also cautioned that memory shortages will persist, potentially limiting its expansion. Nvidia's shares surged nearly 5 percent in extended trading following the forecast, having previously declined over 1 percent.

CEO Jensen Huang emphasized that AI has reached a critical juncture, proving both useful and profitable, with compute now generating revenue. The company's aggressive growth strategy, highlighted by the launch of its next-generation Vera Rubin processors and an expansion into AI labs, aims to capitalize on the expanding market for AI computing.

Despite supply constraints, Nvidia expects demand from AI labs, enterprises, and sovereign buyers to significantly boost its business. The company disclosed its road map for growth, including a ramp-up of Vera Rubin processors and sales expansion at AI labs like OpenAI. Analysts view the forecast as credible, given the broadening demand beyond hyperscalers in AI clouds, with enterprises and industrial customers contributing significantly.

Nvidia's Vera Rubin platform is already generating a fifth of its data center revenue and is expected to account for a quarter of its overall business next year. However, the company remains supply-constrained, with margins expected to bottom out in the fourth quarter at around 71 percent to 72 percent. Nvidia's partnership with Amazon's cloud computing unit will see the deployment of an additional 2 million GPUs in Amazon's global infrastructure over the next two years.

Remarking on the supply constraints, Nvidia's finance chief highlighted that soaring memory prices and higher component costs will continue to pressure margins, which are projected to reach approximately 71 percent to 72 percent by the end of the quarter, down from 74 percent in the previous period.