Chip manufacturing behemoth Nvidia posted record revenue in the fourth quarter as companies across industries look to develop and deploy generative AI. 

The Santa Clara, Calif.-based company posted data center revenue of $18.4 billion, up 409% year over year, according to the company’s earnings report.

“Fourth-quarter data center growth was driven by both training and inference of generative AI and large language models across a broad set of industries, use cases and regions,” Chief Financial Officer Colette Kress said during the earnings call Feb. 21. 

Companies have also started building modern data centers, or “AI factories, purpose-built to refine raw data and produce valuable intelligence in the era of gen AI,” she said. 

Nvidia AI models can work seamlessly with cloud and on-premises tech stacks, “allowing customers to deploy with a multi-cloud or hybrid-cloud strategy,” Kress said. 

THE BIG PICTURE: One of the most notable trends over the past year is the significant adoption of AI by financial services companies, Kress said. 

“In financial services, customers are using AI for a growing set of use cases, from trading and risk management to customer service and fraud detection,” she said. “American Express improved fraud detection accuracy by 6% using Nvidia AI.” 

Financial institutions including Bank of America, JPMorgan and TD Bank are deploying AI at a fast pace. 

Bank of America Chief Executive Brian Moynihan said during the company’s Q4 earnings call on Jan. 12 that the $2.4 trillion bank can leverage AI to reduce turnover and increase efficiency. 

TD Bank is exploring gen AI for cross-selling products while JPMorgan is using AI to make its document processes more efficient. 

BY THE NUMBERS: In Q4, Nvidia reported; 

• Revenue of $22.1 billion, up 265% YoY: 
• Net income of $12.3 billion, up 769% YoY; and 
• Operating expense of $3.2 billion, up 23% YoY. 

WHAT THEY ARE SAYING: According to a Bank of America Securities research report, published today, Nvidia is poised to take a leading role in the development and deployment of AI technology, both in AI hardware and software. 

The company’s data centers will also continue to see traction as web scalers, businesses and governments move operations to the cloud, the research report stated. 

The report stated that the price objective of Nvidia is $950 a share by 2025, primarily driven by chip sales and rising data center revenues. 

MARKET REACTION: Nivida stock has been going through the roof since December 2022 as implementation of AI grows. 

The stock has jumped 163% since December 2022 and was trading at $785 a share as of 5 p.m. ET today, up 16.4% from market open.  

Nvidia’s market capitalization is $1.8 trillion, which surpassed Amazon this month to become the fourth-largest company in the world, behind Microsoft, Apple and Saudi Aramco, according to Nasdaq. 

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