A large part of Nvidia’s growth this quarter was driven by data center revenue, which totaled $30.8 billion for the quarter, up 112 percent from last year. The company’s gross profit margin was 74.5 percent, virtually the same as a year ago. But analysts expect Nvidia’s margins could shrink as the company shifts to producing more Blackwell chips, which cost more to manufacture than their less advanced predecessors.
Nvidia’s earnings reports are considered an important indicator for the artificial intelligence industry as a whole. Chip architect’s advanced GPUs, which power complex neural network processing, are what made the current rise of generative AI possible. As Silicon Valley giants rushed to build new chatbots and imaging tools in recent years, Nvidia’s revenue soared, allowing it to overtake Apple as the world’s most valuable public company. Since the launch of ChatGPT in November 2022, Nvidia’s share price has increased almost tenfold.
Almost all big tech companies working on AI, even those building your own processing unitsThey rely heavily on Nvidia GPUs to train their AI models. Meta, for example, has said it is building its latest artificial intelligence technology in a group of more than 100,000 Nvidia H100. Meanwhile, smaller AI startups have been left without enough AI computing power as Nvidia struggled to keep up with demand.
Blackwell, Nvidia’s newest GPU, is made up of two pieces of silicon, each equivalent to the size of its previous chip, Hopper, that are combined into a single component. This design has resulted in a chip that is supposedly four times faster and with more than twice as many transistors as its predecessor.
But Blackwell’s launch hasn’t been easy. Originally scheduled to ship in the second quarter, the new chip ran into a production issue, supposedly delaying launch in a few months. Huang took responsibility for the problem and called it a “design flaw” that “caused poor performance.” Huang told Reuters in August that Nvidia’s former chip manufacturing partner, Taiwan Semiconductor Manufacturing Company Limited, helped Nvidia correct the problem.
Moorhead told WIRED that he remains bullish on Nvidia and is confident the generative AI market will continue to grow over the next 12 to 18 months, at least, despite some recent reports suggesting that AI progress is starting to plateau.
“I think the only way shareholders would riot is if they were worried about capital expenditures or the profitability of hyperscalers,” Moorhead said, referring to big tech companies like Amazon, Google, Microsoft and Meta, which invest heavily in AI Cloud Services. “But I think they will continue to buy Nvidia until that day comes.” Enterprise AI also remains a growth area for Nvidia, he added.
On today’s earnings conference call, Nvidia CFO Colette Kress said Nvidia’s enterprise AI tools are “full speed ahead,” including an operating platform that allows other companies to create their own co-pilots and agents of artificial intelligence. Its clients include Salesforce, SAP and ServiceNow, he said.
Huang echoed the same later in the call: “We’re starting to see enterprise adoption of agent AI,” he said. “It’s really the latest fashion.”