Nvidia surfs the AI wave to soaring profits and success

US chip giant Nvidia, whose products play a crucial role in artificial intelligence systems, crushed expectations on Wednesday, as the post-ChatGPT AI frenzy continues to lift the tech sector.

The Silicon Valley-based company said sales doubled year-on-year to $13.5 billion in the latest completed quarter, leaving a net profit of $6.2 billion -- an eye-watering 843 percent higher than a year before.

Signaling that the boom in AI is still going strong, Nvidia said revenue in the current quarter would ramp up further to $16 billion.

"A new computing era has begun," Nvidia CEO Jensen Huang said after the stellar earnings report.

"Together accelerated computing and generative AI are driving a broad based computer industry platform shift. Our demand is tremendous," he said on an analyst call.

Nvidia's stock rose more than 8 percent following the results. This year, the company's share price has more than tripled.

Nvidia's quintessential position in delivering artificial intelligence has made it a bellwether on the generative AI frenzy that took hold of the tech world after the release of ChatGPT late last year.

As the wave began to build, the company already wowed Wall Street with spectacular earnings earlier in the year, helping transform Nvidia into a trillion dollar company based on market capitalization, a rare perch shared only by a handful of giants.

"The entire tech sector and overall market was waiting for Nvidia with this being the purest and best barometer for AI demand," said Dan Ives of Wedbush Securities.

In the end, the earnings "were a 'drop the mic' moment that will have a ripple impact for the tech space for the rest of the year," he said.

Riding high on his success, Huang, who is known for always wearing a black leather jacket, urged companies to shift their spending away from classic computing and embrace AI.

"AI provides a new way of generating productivity, a new way of generating new services to offer to your customers and accelerated computing helps you save money and save power," Huang said.

Nvidia manufactures graphics processing units (GPUs), a powerful chip technology that is necessary to build the generative AI that delivers ChatGPT as well as image, facial and speech recognition.

The company also offers AI-focused computers and services making it an unparalleled one-stop shop for AI.

Originally designed for video game graphics, each of Nvidia's GPU chips cost tens of thousands of dollars and companies are scrambling to stock up as the pressure to keep up with the AI revolution grows.