By Stephen Nellis, Max A. Cherney and Zaheer Kachwala
May 20 (Reuters) – Nvidia Chief Executive Jensen Huang on Wednesday wanted to assure investors that the world’s most valuable company can maintain its successful growth with the help of a broad customer base and that new products will help it surpass the $1 trillion in sales it has forecast for its flagship AI chips.
However, shares fell 1.6% in extended trading, a sign that investors believe Nvidia will face tougher competition even though it forecast second-quarter revenue above Wall Street estimates and announced an $80 billion share buyback program.
Nvidia expects revenue of $91 billion, up 2% from estimates of $86.84 billion, according to data compiled by LSEG.
The company’s results are largely considered a barometer of the health of the AI market, as its chips are used in virtually every major data center in the world, powering the largest and most advanced AI models.
“Nvidia hit another beat, but at this point that’s pretty much priced in as it continues to outperform quarter after quarter,” said eMarketer analyst Jacob Bourne. “The remaining question is whether it can convince investors that AI development has durability through 2027 and 2028, especially as the narrative shifts toward inference workloads and competing silicon from Google, Amazon, AMD and Intel.”
The company also said it would increase its quarterly cash dividend to 25 cents per share, from 1 cent.
Spending on AI infrastructure continues to grow rapidly, with US tech giants including Alphabet, Amazon and Microsoft expected to spend more than $700 billion on AI this year, a sharp jump from around $400 billion in 2025.
Huang told analysts on a conference call that he believes Nvidia will grow faster than those “hyperscale” customers, pointing to a new customer subsegment in its data center business that includes AI-specific cloud companies. Sales to those customers were about the same as those of the big cloud players, but they grew faster quarter over quarter.
“We should grow faster than large-scale capital spending,” Huang said.
GROWING COMPETITION FROM CUSTOM CHIPS
While they rely heavily on expensive Nvidia processors, many of Nvidia’s largest customers are also pouring funds into developing their own custom chips to run models, posing a risk to Nvidia’s long-standing dominance over the chip industry.
Nvidia faces competition not only from Big Tech but also from other chip rivals, including Intel and Advanced Micro Devices, which have touted a big revenue opportunity by selling CPUs to serve the inference market.