Nvidia Earnings Fuel AI Infrastructure Demand

Nvidia's second-quarter earnings have reinforced the growing demand for artificial intelligence (AI) infrastructure, with investors looking beyond the chipmaker for the next beneficiaries of this trend.

Dan Ives, senior managing director and partner at Yorkville Ives, said that Nvidia's results showed how various parts of the AI ecosystem fit together like a 'Jenga puzzle.' He estimated that demand for AI infrastructure has accelerated by roughly 20% over the past three months.

Ives believes investors are increasingly looking toward the 'second, third, fourth derivative' of the AI boom, which includes hyperscalers and software companies. He pointed to Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) as potential beneficiaries, given their role in providing cloud capacity needed to deploy AI models.

Nvidia's data center division drove most of its growth, contributing $89 billion versus average estimates of $85.8 billion. The company forecast revenue of $108 billion for the third quarter, ahead of analyst projections. Adjusted gross margins are expected to hold near 74%.