Earnings

AI is driving bullish earnings and tech company prospects

Nvidia earnings outpaced projections thanks to AI, as other companies take a more practical approach.
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Everyone’s talking about AI these days—whether as a harbinger of civilizational doom, the path to a paradisiacal future, or somewhere in between, the technology is a hot topic and the sky’s the limit.

On May 24, AI darling Nvidia gave some of its most robust guidance and projections on how the technology will continue to explode this year, with CEO Jensen Huang telling investors that “incredible orders to retool the world’s data centers” pushed its second quarter earnings to $11 billion, more than 50% higher than the projected $7.2 billion.

“You’re seeing the beginning of…a 10-year transition to basically recycle or reclaim the world’s data centers and build it out as accelerated computing,” Huang said.

Step carefully. Caution is always important when dealing with new technology, but as Cisco CEO Chuck Robbins said during the company’s earnings call on May 17, it’s also important to remember you could be left behind.

This time, Cisco has networking infrastructure in place for web scaler AI, he said, so that the company won’t be caught flat-footed like they were a decade ago during the beginning of the web scale infrastructure boom.

“This time, for this AI infrastructure, from a networking perspective, I believe we are better positioned than anybody else,” Robbins said, adding, “Our core networking technology is already powering some of the leading AI models run by hyperscalers around the world.”

Practical matters. The nuts and bolts of how AI is utilized aren’t as exciting as looking to the future, but they’re equally important. During a call with investors on May 23, Palo Alto CEO Nikesh Arora said that the general revival of interest in AI has led the company to continue its work with the technology and to keep tabs on its uses by adversaries.

“As we have always maintained, AI is a data problem, and security is a data problem, and has an interesting role to play in security—both for its ability to help deliver superior security outcomes in near real time, and, unfortunately, the potential threat associated with the AI being used to generate attacks,” Arora said.

Palo Alto is utilizing AI to the technology’s potential by applying it to the network stack and taking advantage of the scope of its power. In practice, that means high rates of data analysis; according to Arora, investing in the technology has “driven tangible customer benefits.”

“In a typical day, we analyzed nearly 750 million—yes, 750 million—new unique telemetry objects worldwide,” Arora said. “This includes files, URLs, domains, DNS connections, and other signals.”

“Our AI models analyze this data,” he added. “And every day, we see 1.5 million new attacks that have never been seen before.”

Top insights for IT pros

From cybersecurity and big data to cloud computing, IT Brew covers the latest trends shaping business tech in our 4x weekly newsletter, virtual events with industry experts, and digital guides.