- Nvidia’s unstoppable growth continued this week as the semiconductor designer and major producer of graphics processors (GPUs), essential for Artificial Intelligence applications, reported an impressive 101% annual revenue growth, reaching a staggering $13.5bn.
- Nvidia reported an astounding $6.2 billion in net income for the quarter, a remarkable 422% surge y/y. The profitability of its AI chips surged, with the a gross margin expanding to 71.2%, a remarkable achievement for a physical product, thanks to growth in its profit-rich data center sales.
- Nvidia’s strong performance was primarily fuelled by its data center segment, encompassing AI chips. This was driven by soaring demand from major players in cloud services and the consumer internet realm, including Alphabet, Amazon, and Meta, all of whom eagerly adopted the latest processor generation. Impressively, this division recorded a remarkable $10.32bn in revenue, marking a staggering 171% y/y growth and surpassing the projected $8.03bn figure.
- Contrastingly, the gaming segment, once Nvidia’s core business, saw a 22% revenue uptick compared to the previous year, reaching $2.5bn.
- Nvidia maintains a stake in crafting cutting-edge chips tailored for high-end graphical applications, but this segment declined 24% y/y to $379m. Notably, the automotive revenue reported by the company amounted to $253 million, a 15% jump y/y.
- Nvidia is expecting fiscal third-quarter revenue of $16bn, higher than the $12.6bn forecast, with the guidance suggesting sales in the current quarter will grow 170% y/y. Non-GAAP gross margins are expected to be 72.5% give or take 50 basis points.
- Jensen Huang, founder and CEO of NVIDIA said “A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”
Nvidia’s strong sales and forecast underscore how central the company’s graphics processing units (GPUs) have become to the generative AI boom. Nvidia’s A100 and H100 AI chips are needed to build and run AI applications that take simple text queries and respond with conversational answers or images. Nvidia’s board authorized $25 billion in share buybacks after the company purchased $3.28 billion in shares during the quarter. This is a sign that management have confidence in the future of the business and believing the shares to be undervalued in the early years of the AI revolution. We do not own Nvidia shares, but instead we own the semiconductor fabricator, Taiwan Semiconductor Manufacturing Corporation in the microchip supply chain.
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