Shares of Nvidia are up 65% so far in 2023, outperforming the S&P 500 and other semiconductor stocks. Nvidia (NASDAQ:NVDA) remains the world leader in high-performance graphical processing units or GPUs, used in gaming PCs and data centers. Earnings Boost: The strength reflects the graphics microchipmaker’s better-than-expected Q4 financial results and its Q1 guidance that came in above the consensus. The Q4 performance came on the back of a rebound in gaming revenue after the steep drop in Q3 that worried investors a lot. Datacenter also held up fairly well despite similar fears of softness.

Nvidia reported revenue of $6.05 billion which increased by 2% sequentially and beat consensus estimate by $31.61 million. Breaking down revenue by segment, its data center revenue was $3.62 billion, which increased by 11% YoY but was surprisingly down 6% QoQ. This was mainly driven by lower demand in China and cloud providers delaying spending due to macroeconomic uncertainty in the rest of the world. Having said all that, Nvidia benefits from the AI ​​hype cycle. Investors pushed the stock about 14% higher on Thursday despite a 21% decline in overall revenue, largely as the company's AI chip business showed continued growth as revenue rose 11% to more than $3.6 billion in the quarter.

Nvidia CEO Jensen Huang heavily focused on artificial intelligence during the aftermath conference call, suggesting that the recent AI boom is pivotal to the company's strategy. “In the past 60 days, the activity around the AI ​​infrastructure we've built and around Hopper and Ampere inferring impact large language models has just exploded,” Huang said. “Without a doubt, our perception of the year has changed quite a bit at the start of the year because of the last 60, 90 days.”