NVIDIA Reaps Profits from AI Chip Division
NVIDIA’s latest earnings report reveals the answer to who is profiting the most from the AI boom. The company reported a staggering revenue of $13.51 billion in the second quarter, surpassing last year’s $6.7 billion and exceeding market predictions. Additionally, its GAAP net income reached $6.18 billion, a remarkable increase of nine times compared to the $656 million earned in Q2 2022.
NVIDIA’s gaming segment also did quite well with second-quarter revenue of $2.49 billion, up 22 percent from last year. During the quarter, it started shipping the budget-oriented GeForce RTX 4060 GPU, unveiled its Avatar Cloud Engine (ACE) for games, and added 35 DLSS titles, including Diablo IV. (Earlier this week, it released DLSS 3.5, which is designed to use artificial intelligence to improve the look of ray-traced games.)
But it was the AI and data center segments that took NVIDIA to new heights. In this sector alone, its revenue reached a record $10.32 billion, up 141 percent from the first quarter of 2023 and up 171 percent from a year ago.
Earlier this year, CEO Jensen Huang said that in 2018, NVIDIA had a “stake the company” moment when it started using AI to power DLSS, “and while we’re reinventing CG with AI, we’re reinventing GPU for AI.” He later added that “the future is a large language model (LLM) in front of almost everything,” from VFX to heavy industry.
NVIDIA’s advance information is now in favor of the company’s flagship H100 Tensor Core GPU. It has also built more complex systems, such as the HGX box, which puts eight H100 GPUs into a single computer. All this helped it generate huge cash flows with top customers investing heavily in NVIDIA GPU technology to build complex AI models – such as with the Microsoft Azure segment.
In addition, the company’s use of custom software and applications makes it difficult for customers to switch to competitors such as AMD. “Our data center products contain a significant amount of software and complexity, which also helps with gross margins,” said Colette Kress, NVIDIA’s chief financial officer, on an analyst call.
All of this led to a perfect storm of victory. “During the quarter, major cloud providers announced massive NVIDIA H100 AI infrastructures. Leading enterprise IT systems and software vendors announced partnerships to bring NVIDIA AI to every industry. The race to adopt generative AI is on,” Huang said in a statement. “Companies worldwide are moving from general purpose to accelerated computing and generative artificial intelligence.” The company expects more to come and predicts revenue of about $16 billion for the third quarter.
