How Nvidia came out on top with its AI gamble

When Nvidia chose to bet big on AI, skeptics might have shook their heads. But as the company’s recent financial reports reveal, that bet has translated into a resounding victory.

Nvidia’s revenue growth has skyrocketed, tripling to $18.12 billion.

Key points from the report:

• Nvidia’s revenue for the quarter was $18.12 billion, exceeding the expected $16.18 billion.
• Revenue grew by 206% year over year, with net income reaching $9.24 billion.
• Data center revenue totaled $14.51 billion, a 279% increase, with half coming from cloud infrastructure providers.
• The gaming segment contributed $2.86 billion, an increase of 81%.
• Nvidia’s guidance for the fiscal fourth quarter projects $20 billion in revenue, indicating nearly 231% revenue growth.

NVIDIA, once synonymous with graphic processing units (GPUs), has transitioned into a leading AI solutions giant. While its gaming division still performs robustly with $2.86 billion in revenue, AI is the new protagonist in NVIDIA’s success story, propelling the company past the $1 trillion market cap—a first for a chipmaker.

According to Jensen Huang, the founder and CEO of Nvidia:

“Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI of Nvidia.”

From Silicon to Software: Pioneering AI

NVIDIA’s AI journey commenced with CUDA in 2006, positioning its GPUs as the go-to hardware for AI applications. The company didn’t stop at hardware prowess; it invested in software, producing a suite of tools like CUDA, cuDNN, TensorRT, and Clara, which revolutionized AI development and deployment. Strategic acquisitions, like Mellanox Technologies, strengthened NVIDIA’s AI offerings.

The company’s introduction of the GH200 GPU, with increased memory and an additional Arm processor, generated significant interest, including a purchase of 248 H100s by Iris Energy for $10 million.

Nvidia’s GPUs have seen increased demand due to the adoption of generative artificial intelligence capabilities, driven by the introduction of Microsoft-backed startup OpenAI’s ChatGPT chatbot.

The China Impact

The United States imposed a partial ban on chip exports, including to China, a significant market for Nvidia. With around 20%-25% of their data center revenue coming from China, this could have thrown a wrench in their gears.

Nvidia’s CFO, Colette Kress, assures everyone that while they might face some bumps in China during the fourth quarter, robust growth in other regions will more than makeup for it.