Record Data Center Demand Lifts Nvidia Up, With AI Spending To Reach US$4 Trillion This Decade
Nvidia is getting closer to its $1 trillion revenue goal. But chip restrictions to China, the Iran War, and other factors still threaten its outlook.
This article, written by Melissa Angell, was originally published on Inc.com.
NVIDIA once again beat Wall Street’s expectations with another strong quarter as data center demand fuels revenue for the artificial intelligence (AI) chipmaker. And Nvidia isn’t expecting that to slow down, estimating that annual spending on AI infrastructure could clock in between US$3 trillion and $4 trillion before the turn of the decade.
Nvidia, which is something of a proxy for the AI industry, posted $81.6 billion in revenue for its fiscal first quarter, exceeding Wall Street’s estimates of $78.9 billion. The company credited the buildout of AI factories as the growth engine that helped reel in $75.2 billion in revenue, telling investors during a Wednesday evening earnings call that hyperscalers accounted for more than half of that chunk.
“Agentic AI has arrived, doing productive work, generating real value and scaling rapidly across companies and industries,” NVIDIA CEO Jensen Huang said in a statement.
NVIDIA remains confident in its ability that its chips, specifically Rubin and Blackwell chips, will help propel the company towards $1 trillion in revenue by the end of 2027. The company is also eyeing central processing units, or CPUs, as a future revenue opportunity.
Still, investors remain weary as concerns continue to bubble around the AI bubble, the circular nature of the industry’s financing, and mounting geopolitical tensions. NVIDIA shares dipped about one percent after-hours, trading around $221 a share.
NVIDIA further acknowledged within its quarterly filing that tensions are on the horizon that could dampen growth. For one, there are the licensing restrictions it contends with in selling certain chips to customers in China, though the US government in February greenlit the sale of Nvidia’s H200 chips to some Chinese clientele. (Some Democratic lawmakers have pushed back against the decision, citing national security concerns.)
NVIDIA says it has not made any revenue yet from the H200 licensing program and that it does not “yet know whether any imports will be allowed into China.”
Another threat facing the company: a lengthy Iran war.
“Our global supply chain for our networking products, including our Israel operations of approximately 5,900 employees supporting research and development, operations, and sales and marketing, has not been significantly impacted by the conflict in the Middle East,” Nvidia wrote in its filing. “If the conflict escalates or extends, it could affect future product development, supply chain, and revenue, and create business uncertainty.”
