Nvidia, the chip-making company essential to the development of A. I. systems, announced that sales for the current quarter are expected to nearly triple compared to a year ago. The company reported second-quarter revenue of $13. 5 billion and projected sales of $16 billion for this quarter. This rapid growth in demand for Nvidia's graphics processing units (GPUs), used in the majority of A. I. systems, reflects the expanding tech industry boom. The heightened interest in these chips stems from the heavy demand by cloud computing services and other customers to power their A. I. systems. Nvidia's second-quarter revenue saw a significant jump of 101 percent from the previous year, reaching $13. 5 billion, with profits surging to almost $6. 2 billion. This result exceeded Nvidia's expectations and contributed to its market value surpassing $1 trillion. As the tech industry eagerly awaits news about chip demand in the current quarter, Nvidia projected sales of $16 billion, nearly triple the level from a year ago and $3. 7 billion more than analysts' expectations. Strong financial performance from chip makers such as Nvidia often sets the tone for the broader tech industry, potentially reigniting enthusiasm for tech stocks on Wall Street. While other companies invest heavily in A. I. with minimal returns, Nvidia continues to thrive. Its CEO, Jensen Huang, notes that major cloud services and corporations are adopting Nvidia's A. I. technology across various industries due to the multitude of applications available. As a result, Nvidia's share price rose by more than 9 percent in after-hours trading. Previously, Nvidia garnered most of its revenue from GPU sales for video game rendering. However, the increasing use of these chips by A. I. researchers propelled Nvidia's growth, leading the company to enhance its GPUs and software for A. I. applications. Data center chip sales, which cater to A. I.

training, now represent Nvidia's largest business segment, with second-quarter revenue reaching $10. 3 billion. The race to incorporate generative A. I. capabilities has become crucial for corporate executives and boards of directors. The only obstacle for Nvidia presently is its struggle to meet the demand for chips, creating opportunities for major chip companies like Intel and Advanced Micro Devices, as well as start-ups such as Groq. Nvidia's strong sales contrast with the performance of other chip industry peers, who face challenges due to weak demand for personal computers and data center servers. Industry analysts believe that spending on A. I. -specific hardware, including Nvidia's chips, is diverting funds away from other data center infrastructure investments. Market research firm IDC estimates a 68 percent increase in cloud services' spending on A. I. server systems within the next five years. Despite competitors such as Google, Amazon, Meta, and IBM producing A. I. chips, Nvidia currently holds over 70 percent of A. I. chip sales and an even larger share in training generative A. I. models, according to Omdia. The demand is particularly high for the H100, a new A. I. -focused GPU from Nvidia that began shipping in September. Companies of all sizes are scrambling to acquire these chips, which are fabricated using advanced processes and require sophisticated packaging combining GPUs with specialized memory chips. The production and availability of the H100 largely depend on the actions of Taiwan Semiconductor Manufacturing Company (TSMC), responsible for both fabrication and packaging. Industry executives anticipate a shortage of H100s throughout 2024, which poses challenges for A. I. start-ups and cloud services seeking to offer computing services utilizing these new GPUs. Nvidia is diligently working with its production partners and exploring collaboration opportunities to address the chip shortage. Mr. Huang expressed confidence that supply will substantially increase throughout the rest of this year and the next.