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Indian Express
2 days ago
- Business
- Indian Express
How US President Trump's restrictions on AI chip sales to China affect Nvidia
Nvidia has said it expects tighter US export controls on its China-bound AI chips to wipe out $8 billion in sales in the coming quarter, even as the chip giant reported strong earnings and revenue for the first quarter of its fiscal year 2026, which ended on April 27. The US-based chip designer recorded year-over-year (YoY) growth of 73 per cent driven by surging demand in other global markets. Nvidia shares rose by 6 per cent the day after it reported earnings on Wednesday, May 28. The company reported revenue of $44.06 billion for the quarter, up by 69 per cent YoY, beating analyst estimates of $43.3 billion. Nvidia further said it expects about $45 billion in sales in Q2 FY26. Nvidia's quarterly report has allayed fears among investors that demand for its Graphics Processing Units (GPUs), used to train and deploy AI models like OpenAI's o3, is slowing down. The company's quarterly earnings were also closely watched by the tech industry for clues on how growing uncertainty from US President Donald Trump's tariff policies and export restrictions on AI chips to China, will affect Nvidia's international business. China is a key market for Nvidia, accounting for 13 per cent of its sales in the past financial year. In a bid to maintain its lead in the high-stakes AI race, the US government has sought to prevent the most advanced chips from being sold in China by tightening export rules. While Chinese competitors still lag behind Nvidia's cutting-edge chip design technology, several analysts have warned that the gap is narrowing. They have pointed out that US efforts to curb China's access to advanced semiconductors have not been successful due to loopholes and existing chip stockpiles in China. Some have even argued that the restrictions have counter-intuitively intensified competition against one of America's most valuable companies while cutting off access to a key growth market. The H20 processor was specifically designed by Nvidia to comply with existing limits by the US government. Chinese AI startup DeepSeek's R1 model is believed to be powered by a mixed stack of Nvidia's H800, H100, and H20 GPUs. Following the debut of DeepSeek's low-cost, compute-efficient AI model, several Chinese companies including Tencent, Alibaba, and TikTok parent ByteDance reportedly ramped up orders for H20 chips. The H20 is not Nvidia's most advanced chip and was primarily designed to get as close as possible to US export limits. However, it reportedly offers the same compute as advanced chips for a crucial step in developing large language models (LLMs) known as inference. This process involves running an LLM on previously seen data to identify the patterns it has learnt after the training stage. During the first quarter of fiscal 2026, the Trump administration reportedly told Nvidia that the H20 chip would require a separate export licence to be sold in China. Besides the expected $8 billion hit, Nvidia said it incurred $4.5 billion in charges related to excess inventory for the H20 chip. If not for the China-related charge, Nvidia said its gross margin of 61 per cent for the quarter would have been 71.3 per cent. Extra sales worth $2.5 billion would have been recorded in the reported quarter too, the company added. Notably, US export restrictions on chip sales to China show no signs of easing. The Trump administration has also ordered more companies, including firms that develop design software for semiconductors, to stop selling to China in the absence of a licence, according to a report by Reuters. In an earnings call on Wednesday, Nvidia CEO Jensen Huang told investors that the $50 billion market in China for AI chips is 'effectively closed to US industry.' 'The H20 export ban ended our Hopper data center business in China. We cannot reduce Hopper further to comply. As a result, we are taking a multibillion-dollar write-off on inventory that cannot be sold or repurposed. We are exploring limited ways to compete, but Hopper is no longer an option. China's AI moves on with or without US chips,' Huang said. Speaking at the annual Computex tech trade show held in Taiwan earlier this month, Huang said that Nvidia's market share in China had fallen from 95 per cent to 50 per cent over the past four years. However, on the earnings call, he also said that global demand for Nvidia's AI infrastructure was still going strong. 'Countries are racing to build national AI platforms to elevate their digital capabilities,' Huang added. The Trump administration has also rescinded the AI diffusion rule which was introduced by former US President Joe Biden at the start of the year. This rule essentially limited the number of US-made AI chips that could be sold in international markets, including India, without special approval by the US government. Nvidia and other US chip designers have long been lobbying against export controls to China as they fear losing out on a key market. Meanwhile, the success of DeepSeek and reports of Huawei's chip progress have led many to question the effectiveness of US-imposed chip controls. But even as these restrictions become more stringent, Nvidia's business is not likely to struggle as it continues to sell to major hyperscalers like Meta and Microsoft. 'On average, major hyperscalers are each deploying nearly 1,000 NBL72 racks, or 72,000 Blackwell GPUs per week, and are on track to further ramp output this quarter,' Colette Kress, the chief financial officer of Nvidia, said on the call. It is also reducing its reliance on big tech buyers by supplying for national AI initiatives such as the recently announced 500-megawatt AI infrastructure project in Saudi Arabia and a 5-gigawatt AI campus in the UAE under the US-led Stargate Project. 'Sovereign AI is a new growth engine for NVIDIA Corporation,' Huang said on the earnings call. Nvidia's net income rose by 26 per cent to $18.8 billion, up from $14.9 billion a year earlier. Sales from AI chips and related parts accounted for 88 per cent of the company's total revenue. Nvidia further said that half of the revenue from its data center business was from large cloud providers while the company's network products, commonly used to connect stacks of chips for AI research, saw $5 billion in sales. Meanwhile, the company's gaming division saw 42 per cent growth YoY to $3.8 billion. Besides being essential for AI development, Nvidia's chips are also used for gaming applications. The upcoming Nintendo Switch 2 gaming console will also be powered by a processor designed by Nvidia. Besides export controls, Nvidia shareholders were also focused on the company's rollout of its new GB200 NVL72 'thinking machines' that comprise 72 Blackwell GPUs and cost around $3 million, according to a report by TechCrunch. These systems are specially designed for reasoning. The new hardware began shipping in February this year, soon after the disruption caused by the launch of DeepSeek's R1. Many analysts had estimated that the chaos around DeepSeek would reduce the unit's estimated shipments by half. In its results, the company highlighted strong momentum in Blackwell-based systems as the GB200 NVL72 machines ramped to full-scale production during the quarter 'across system makers and cloud service providers.' 'Microsoft, for example, has already deployed tens of thousands of Blackwell GPUs and is expected to ramp to hundreds of thousands of GB200s with OpenAI as one of its key customers,' Nvidia CFO Colette Kress said on the call.
Yahoo
28-03-2025
- Business
- Yahoo
3 Semiconductor Stocks to Buy Amid Rising Data Center Demand
As the digital era continues to evolve, data centers stand at the heart of technological advancement, powering everything from cloud computing to artificial intelligence (AI).In 2025, the growing demand for data centers will be fueled by advancements in AI, cloud computing and the need for more efficient infrastructure. This surge is driving key trends, such as hyperscale data centers, liquid cooling, edge computing, and a heightened focus on sustainability and energy the Fortune Business Insight report, the global data center market is projected to grow from USD 269.79 billion in 2025 to USD 584.86 billion by 2032, seeing a CAGR of 11.7%, reflecting the sector's robust growth, driven by increasing data storage and processing companies, including Credo Technology CRDO, Broadcom AVGO and Marvell Technology MRVL, are likely to be among the key beneficiaries of this trend, as semiconductors are the foundational components of the hardware that powers data centers. The semiconductor industry is poised to benefit significantly from the increasing data center market in 2025, driven by the surge in AI and high-performance computing workloads leading to the rising demand for high-performance chips, particularly Graphics Processing Units (GPUs) and memory like High Bandwidth Memory (HBM).As AI models grow more complex, the need for faster processing and efficient data storage has made GPUs and HBM crucial components. GPUs enable parallel processing for machine learning and deep learning tasks, while HBM provides the high-speed memory needed to handle massive datasets. This trend is expected to continue as AI applications become increasingly central to business and technological in DRAM and NAND pricing will act as tailwinds for semiconductor stocks catering to the memory semiconductor industry is expected to continue its growth trajectory in 2025, driven by strong demand for AI and data center technologies, as well as increasing chip demand across various sectors. According to the Semiconductor Industry Association, global semiconductor sales reached $56.5 billion in January 2025, marking a 17.9% increase from $47.9 billion in January 2024. The global semiconductor market is projected to maintain its upward momentum, with sales anticipated to reach $697 billion in the immense growth prospects amid the rising data center demand, it is prudent for investors to look for fundamentally strong semiconductor stocks that are poised to benefit from this trend. Here, we are discussing three aforementioned stocks — CRDO, MRVL and AVGO — that look promising. Credo Technology is gaining a strong market presence in both Ethernet and Active Electrical Cables (AECs) solutions specialized for data centers. AEC products experienced triple-digit sequential growth in the third quarter of fiscal 2025, driven by its increasing adoption in the data center demand for AECs grew as they proved to be more reliable than laser-based optical solutions, with ZeroFlap AECs offering more than 100 times better reliability than rack-to-rack made AECs an increasingly attractive option for data center applications, contributing to the new expansion of AEC usage and solidifying this Zacks Rank #1 (Strong Buy) company's market position. You can see the complete list of today's Zacks #1 Rank stocks Zacks Consensus Estimate for Credo Technology's 2025 earnings is pegged at 63 cents per share, revised upward by 26% over the past 30 days. CRDO has skyrocketed 100.2% in the trailing 12 months compared with SPDR S&P Semiconductor ETF's XSD decline of 8.6%. Credo Technology Group Holding Ltd. price-consensus-chart | Credo Technology Group Holding Ltd. Quote Broadcom is capitalizing on the growing investments in AI data centers, solidifying its role as a key player in the evolving data center Zacks Rank #2 (Buy) company recently launched the Sian3 and Sian2M high-speed networking chips for AI data centers, with Sian3 utilizing advanced 3-nanometer process technology for over 20% power reduction in optical modules. At the same time, Sian2M enhances power efficiency over multi-mode fiber to meet the growing demand for high-bandwidth connectivity in AI and ML recent introduction of PCIe Gen 6 technology, tested with Micron and Teledyne LeCroy, enhances AI data center performance with advanced telemetry and diagnostics through its Interoperability Development company's consensus mark for 2025 earnings is pegged at $6.56 per share, which has increased 3.9% over the past 30 days. Broadcom has rallied 29.8% in the trailing 12 months and outperformed the SPDR S&P Semiconductor ETF. Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote Marvell Technology is capitalizing on robust demand in the data center market, offering solutions like pulse amplitude modulation (PAM) chips, digital signal processors, silicon photonics and laser drivers that enhance data center communication. The Zacks Rank #2 company's networking solutions, like PAM products and ZR electro-optics, are gaining traction as data centers are becoming increasingly fundamental for AI due to the massive computing power, storage and networking capabilities required to train and deploy AI models efficiently. Its leadership in AI-driven data center infrastructure, custom silicon and high-speed networking has been strengthening its innovation edge, Marvell Technology partnered with TeraHop to demonstrate the industry's first end-to-end PCIe Gen 6 over optics at OFC 2025, showcasing PCIe's extended reach and low-latency capabilities using Marvell's Alaska PCIe Gen 6 retimer and TeraHop's active optical cable, aimed at enhancing AI-driven data centers with scalable, high-performance company's consensus mark for fiscal 2026 earnings is pegged at $2.76 per share, which has decreased 1.8% over the past 30 days. MRVL has declined 8.5% in the trailing 12 months, in line with the returns of the SPDR S&P Semiconductor ETF. Marvell Technology, Inc. price-consensus-chart | Marvell Technology, Inc. Quote Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report SPDR S&P Semiconductor ETF (XSD): ETF Research Reports Credo Technology Group Holding Ltd. (CRDO) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
07-02-2025
- Business
- Yahoo
Data Center Market Witnessing a Rise in Revenue of US$ 876.8 Billion by 2032
Investment trends in the global data center market indicate a strong emphasis on strategic growth and technological innovation. Leading operators are channeling funds into the development of next-generation facilities that feature sophisticated cooling systems, automated management of infrastructure, and improved security measures. This focus on advanced technologies not only enhances operational efficiency but also addresses the increasing demands of modern data processing and storage needs. New Delhi, Feb. 07, 2025 (GLOBE NEWSWIRE) -- As detailed in the latest research from Astute Analytica, the global data center market was valued at US$ 352.93 billion in 2024 and is projected to hit the market valuation of US$ 876.80 billion by 2033 at a CAGR of 10.64% during the forecast period 2025–2033. The rapid transition toward digital transformation across various industries is significantly fueling the demand for data centers. According to projections from analyst firm Dell'Oro Group, global annual capital expenditure (capex) for data centers is expected to exceed $1 trillion by 2029. This remarkable growth is underscored by a projected compound annual growth rate (CAGR) of 21 percent within the sector during this period. Download Free Sample Pages @ A noteworthy trend is the anticipated surge in spending on accelerated servers designed for AI training and domain-specific workloads, which could account for nearly half of all data center infrastructure expenditures by 2029. This shift reflects the increasing reliance on data-intensive processing capabilities required to support advanced technologies like artificial intelligence. In Latin America, demand for data centers is on the rise, with net absorption reaching 73.3 MW in the first quarter of 2024. This growth is particularly driven by hyperscale companies that are expanding their presence in the region. The expansion is indicative of the broader trend where major players in the tech industry recognize the strategic importance of establishing a strong foothold in emerging markets, ensuring they can effectively support their growing customer bases. Furthermore, the data center sector is increasingly incorporating automation and artificial intelligence (AI) technologies to enhance their operations. Rising Adoption of AI: Expanding the Demand for Data Centers The surging demand for AI-ready data centers presents a wealth of opportunities for companies and investors throughout the entire value chain. Central to the AI revolution is the rapid evolution of semiconductor technology, which has seen remarkable advancements in recent years. Over the past two years, Graphics Processing Units (GPUs) have significantly increased in power, resulting in higher rack densities that now range from 40 kW to 130 kW per rack. Looking ahead, projections suggest that future chips could achieve an astonishing 250 kW per rack, further enhancing the capacity of data centers to handle demanding workloads. As new data centers are being constructed, they are increasingly designed to accommodate both AI and traditional workloads. While AI is a major growth driver in the industry, even the most optimistic adoption scenarios indicate that AI will account for less than 50% of total data center demand by 2030. Instead, traditional workloads, which typically involve lower-intensity tasks such as data storage and cloud-based applications, will continue to dominate the landscape. This highlights the need for a balanced approach in data center design to ensure they can efficiently manage a diverse range of workloads. In recent years, data center operators have increasingly turned to AI technologies to enhance the efficiency of their daily operations. A recent survey revealed that 57 percent of data center owners expressed confidence in allowing an AI model to make operational decisions—a notable increase of nearly 20 percent compared to the previous year. This growing trust in AI underscores the technology's potential to optimize processes, reduce costs, and improve overall service reliability in the data center industry. As the sector continues to evolve, the integration of AI into operations is likely to become even more prevalent, shaping the future of data center management. Hyperscale Data Centers are Gaining Attention Among End-Users The hyperscale segment of the data center market remains a dominant force, accounting for a substantial revenue share of 35.14% in 2023. This segment is primarily driven by major cloud service providers (CSPs) such as Amazon, Microsoft, Google, Meta, Apple, Alibaba, and Tencent. These hyperscale data centers play a pivotal role in the expansion and support of global cloud platforms, facilitating the vast amounts of data processing and storage required in today's digital landscape. As Astute Analytica looks toward the future, it is projected that by 2030, approximately 60 to 65 percent of artificial intelligence workloads in Europe and the United States will be hosted on infrastructures provided by these cloud service providers and other hyperscalers. Notably, around 60% of this capacity is supplied by hyperscale cloud providers and third-party wholesale data center operators, who typically cater to a limited number of large enterprise clients. Technological advancements, coupled with strategic geographical positioning, have led to the emergence of key cities such as Mumbai, Singapore, Amsterdam, and Dublin as leading hubs for hyperscale activity within the data center market. These cities, often referred to as the "four tech cities," are expected to experience significant growth in hyperscale data center development. The favorable conditions in these regions, including robust infrastructure, favorable regulatory environments, and access to a skilled workforce, have made them attractive locations for hyperscale operations. As demand for data processing and storage continues to surge, these cities are poised to host a boom in hyperscale data centers, further solidifying their importance in the global data center ecosystem. Global Data Center Market Major Players Amazon Inc. Dell Technologies Digital Realty Equinix, Inc. Google LLC Hewlett Packard Enterprise Development LP IBM Corporation Microsoft Corporation N+ONE Data Centers NTT DATA, Inc. Oracle Corporation SAP SE Other Prominent Players Market Segmentation By Component Solution Services By Type Co-location Hyperscale Edge Other By Enterprise Size Small and Medium-Sized Enterprises (SMEs) Large Enterprises By Industry Banking, Financial Services & Insurance (BFSI) Information and Communication Technology Government Agencies Energy & Utilities Healthcare Other By Region North America Europe Asia Pacific Middle East & Africa South America For more information about this report visit: About Astute Analytica Astute Analytica is a global analytics and advisory company which has built a solid reputation in a short period, thanks to the tangible outcomes we have delivered to our clients. We pride ourselves in generating unparalleled, in depth and uncannily accurate estimates and projections for our very demanding clients spread across different verticals. We have a long list of satisfied and repeat clients from a wide spectrum including technology, healthcare, chemicals, semiconductors, FMCG, and many more. These happy customers come to us from all across the Globe. They are able to make well calibrated decisions and leverage highly lucrative opportunities while surmounting the fierce challenges all because we analyze for them the complex business environment, segment wise existing and emerging possibilities, technology formations, growth estimates, and even the strategic choices available. In short, a complete package. All this is possible because we have a highly qualified, competent, and experienced team of professionals comprising of business analysts, economists, consultants, and technology experts. In our list of priorities, you-our patron-come at the top. You can be sure of best cost-effective, value-added package from us, should you decide to engage with us. Contact Us:Astute AnalyticaPhone: +1-888 429 6757 (US Toll Free); +91-0120- 4483891 (Rest of the World)For Sales Enquiries: sales@ LinkedIn | Twitter | YouTube CONTACT: Contact Us: Astute Analytica Phone: +1-888 429 6757 (US Toll Free); +91-0120- 4483891 (Rest of the World) For Sales Enquiries: sales@ Website:
