NEW YORK: Nvidia Corp has delivered a revenue forecast that failed to meet the highest expectations, showing that its dizzying growth fuelled by artificial intelligence (AI) has its limits.

Fourth-quarter sales will be about US$37.5bil, the company said in a statement Wednesday.

Though the average analyst estimate was US$37.1bil, according to data compiled by Bloomberg, projections ranged as high as US$41bil.

The outlook suggests that AI excitement may be getting ahead of reality.

Nvidia investors bid up the shares nearly 200% in 2024, turning it into the world’s most valuable company.

But the chipmaker has had trouble keeping up with demand for its products and struggled with production snags this year.

Shares of Nvidia fell about 5% in extended trading following the announcement.

They previously closed at US$145.89 in New York.

Even with a disappointing outlook, Nvidia’s growth over the past two years has been staggering.

Its sales are poised to double for a second year in a row, and it now notches more money in profit than it used to generate in total revenue.

The company’s biggest moneymaker is its accelerator chip, which helps develop AI models by bombarding them with data.

Since OpenAI’s ChatGPT chatbot debuted in 2022, a frenzy of AI services has created insatiable demand for the product.

Other recent earnings reports have given strong signals for AI.

Major Nvidia customers, including Microsoft Corp, Amazon.com Inc’s AWS and Meta Platforms Inc, have reaffirmed their commitment to spend on AI infrastructure.

Nvidia looks to stay ahead of rivals by accelerating its pace of innovation.

That includes a commitment to updating its lineup annually. The company is currently introducing a design called Blackwell, which is faster and has an improved ability to link up with other chips.

But manufacturing challenges have slowed the Blackwell rollout.

For now, Nvidia can’t fill all the orders it’s receiving, the company has said. After production improves, supplies will be plentiful, according to chief executive officer Jensen Huang.

Nvidia has only missed analysts’ estimates on quarterly revenue once in the past five years.

And it has exceeded expectations by as much as 20% in recent periods, creating a high bar for its performance.

Its data-centre division alone now has more revenue than its two nearest rivals, Intel Corp and Advanced Micro Devices Inc, have in total combined.

Net income this year is on course to exceed revenue at Intel, a business that was the chip industry’s biggest company for decades.

Nvidia made its name by selling graphics processors, but discovered that the technology also has applications for AI.

Its chips help software models during the training process, when they learn to recognise and respond to real-world inputs.

Nvidia’s components are also used in systems that then run the software, a stage known as inference, and help power services such as ChatGPT.

The Santa Clara, California-based company has rapidly expanded its product lineup to include networking, software and services, as well as fully built-out computer systems.

Huang is travelling the world lobbying for a broader adoption of his company’s technology and trying to spread its use by corporations and government agencies. 

 - Bloomberg