A blockbuster profit report Wednesday from Nvidia crystallized an important point for both markets and the economy: For better or worse, artificial intelligence is the future.
Whether it’s personalized shopping, self-driving cars or a broad array of robotics uses for health care, gaming and finance, AI will become a factor in virtually everyone’s lives.
Nvidia’s massive fiscal first-quarter earnings helped quantify the phenomenon as the firm nears an elite cast of tech leaders with $1 trillion market valuations and clear leadership status both on Wall Street and in Silicon Valley.
“AI is real, AI is not a fad, and we’re only in the early innings,” said Steve Blitz, chief U.S. economist at TS Lombard. “Does it change the course of the economy over the next three to six months? Probably not. Does it change the economy over the course of the next three to six years? Absolutely, and in very interesting ways.”
Some of the changes Blitz foresees is a reduce in demand for foreign labor, a “point of sale” impact where coding and creative writing can be done by machines instead of people and a host of other activities that go beyond what appears obvious now.
Development of products such as OpenAI’s ChatGPT, a chatbot that converses with the user, have helped bring home the potential.
“It’s hard for me to overstate the value or the impact of AI, and it is in keeping with my view that this coming decade is all about the broader application of technology beyond what we’ve seen to date, beyond computers and phones, and that application has tremendous upside,” Blitz said.
Isolated impact so far
For Nvidia, the upside already has been apparent.
As if profit of $1.09 a share on revenue of $7.19 billion — both well above Wall Street estimates — wasn’t enough, the company guided that it was expecting $11 billion in sales for the current quarter, largely driven by its leadership position in the AI chip-supplying business.
Shares soared more than 26% higher around midday Thursday, and…
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