NVIDIA Crushes Earnings Again As Data Center AI Chip Demand Throttles Up
NVIDIA has served up yet another record quarter, as revealed in its latest earnings release that reflects $30 million in revenue for the three-month period ended July 28, 2024. That's up 15% sequentially and 122% compared to a year ago. Not unexpectedly, it was more record performance in NVIDIA's Data Center division that drove the bulk of growth.
What is somewhat unexpected, however, is a pre-market dip in NVIDIA's share price. Despite the monster quarter and exceeding expectations on Wall Street, investors reacted skittishly, at least in the early going, with NVIDIA's share price down a few percentage points ahead of the opening bell this morning. NVIDIA CEO Jensen Huang probably feels like getting on stage and shouting, "Are you not entertained?!" like Russell Crowe did in Gladiator.
Whether or not investors are entertained, it's been fun to watch NVIDIA's meteoric rise. Jensen deserves a ton of credit for continuing to navigate a changing tide. It wasn't that long ago when NVIDIA was making money hand-over-fist during the cryptocurrency mining boom. But once the crypto well seemingly dried up, NVIDIA's other investments began to pay off in an even bigger way, and specifically the AI gold rush that is currently taking place.
This is highlighted in NVIDIA's Data Center business. If we look back just two years ago, NVIDIA's Data Center division generated over $3.8 billion. It then slipped slightly a quarter later before beginning a steep ascent, culminating (so far) in a record $26.27 million quarter. The Data Center is by far NVIDIA's biggest earner, and it's bringing in boatloads of money as the industry embraces AI.
"Hopper demand remains strong, and the anticipation for Blackwell is incredible," Jensen said. "NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI."
The only real knock, if you want to call it that, is the growth rate has slowed. That's probably why investors are reacting the way they are right now, but share price aside, it's hard to find reasons to be disappointment with NVIDIA's performance. NVIDIA's also positioned to continue capitalizing on the current trend.
"Blackwell samples are shipping to our partners and customers. Spectrum-X Ethernet for AI and NVIDIA AI Enterprise software are two new product categories achieving significant scale, demonstrating that NVIDIA is a full-stack and data center-scale platform. Across the entire stack and ecosystem, we are helping frontier model makers to consumer internet services, and now enterprises. Generative AI will revolutionize every industry," Jensen added.
NVIDIA's second-biggest earner is its Gaming division, and this time it posted a gain after slipping last quarter. Gaming nipped at the heels of $2.9 billion, which is up 9% sequentially and 16% from a year ago. What also makes this impressive is that we're at the point where gamers may find themselves waiting for next-generation GPU hardware based on Blackwell.
There's also an AI angle to the Gaming division that NVIDIA is looking to lean even harder into than it already has, with solutions like DLSS and ACE.
"Every PC with RTX is an AI PC. RTX PCs can deliver up to 1,300 AI tops and are now over 200 RTX AI laptops designed from leading PC manufacturers. With 600 AI-powered applications and games and an installed base of 100 million devices, RTX is set to revolutionize consumer experiences with generative AI," Colette Kress, executive vice president and chief financial officer, said during an earnings call.
NVIDIA's other business divisions (Professional Visualization, Auto, and OEM & Other) also all saw gains, albeit collectively they still account for less revenue than Gaming, which itself is now a distant second to the Data Center. Still, we're talking about hundreds of millions of dollars in revenue between the three.
Looking ahead, NVIDIA appears in good shape to keep cranking out record earnings. Key to that is figuring out production challenges related to Blackwell, which Kress said is a done deal at this point.
"We executed a change to the Blackwell GPU mass to improve production yields. Blackwell production ramp is scheduled to begin in the fourth quarter and continue into fiscal year '26. In Q4, we expect to get several billion dollars in Blackwell revenue. Hopper shipments are expected to increase in the second half of fiscal 2025," Kress added.
With the latest quarterly earnings in the books, NVIDIA's outlook for next quarter is an overall revenue jump to $32.5 billion, plus or minus 2%.
