NVIDIA Smashes Earnings With Monster AI Data Center Revenue Signaling A New Era Of Computing

Avatar of NVIDIA CEO Jensen Huang.
NVIDIA's early and ongoing investments in artificial intelligence technology, including both silicon and software solutions, are paying off in a monstrous way, much to the delight of investor. Shares of NVIDIA soared in after-market trading, after the company posted record revenue of $13.51 billion for the second quarter of its fiscal 2024. That figure represents a gigantic 88% sequential gain, and an even bigger 101% jump from a year ago.

 "A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI," said Jensen Huang, founder and CEO of NVIDIA. "NVIDIA GPUs connected by our Mellanox networking and switch technologies and running our CUDA AI software stack make up the computing infrastructure of generative AI."

NVIDIA Hopper products in front of a data center.

Huang also pointed to leading cloud service providers announcing "massive NVIDIA H100 AI infrastructures," as well partnerships with leading enterprise IT system and software providers to inject the company's AI technologies into "every industry."

"The race is on to adopt generative AI," Huang said.

Indeed it is, and NVIDIA has positioned itself to serve and capitalize on massive growth in a burgeoning market. Various estimates project that the AI market will balloon to over $1.3 trillion by 2030, and perhaps even earlier. NVIDIA's savvy investments in AI technologies are already paying off. During a call with investors, Huang said there are "along the lines of about $1 trillion worth of data centers installed, in the cloud, in enterprise, and otherwise." And it's those data centers that are "transitioning into accelerated computing and generative AI," both of which NVIDIA is heavily invested with many years of R&D under its belt.

Chart of NVIDIA's quarterly revenue trend by division.

That being the case, NVIDIA managed to bring its data center revenue to record heights—data center dollars skyrocketed 171% year-over-year and 141% sequentially to more than $10.3 billion. The record revenue reflects, in part, strong demand for the NVIDIA HGX platform based on the company's Hopper and Ampere GPU architectures, which in-turn was driven by the development of large language models, AI training and inference, and generative AI.

Breaking it down even further, NVIDIA's data center compute revenue rose 195% from a year ago and 157% sequentially on the strong ramp of the company's Hopper-based HGX platform.

The data center had already been NVIDIA's biggest earner for several quarters, only now the gap between data center and gaming revenue is more of a gulf. However, gaming remains a strong earner for the company in and of itself, as gaming brought in $2.49 billion during the quarter, reflecting a 22% gain from last year and 11% sequentially.

"Growth was fueled by GeForce RTX 40 Series GPUs for laptops and desktop. End customer demand was solid and consistent with seasonality. We believe global end demand has returned to growth after last year's slowdown," said Colette Kress, executive vice president and chief financial office of NVIDIA.

This occurred with only 47% of NVIDIA's customer base having upgraded to GeForce RTX hardware, and only 20% who have purchased a GeForce RTX 3060 or higher SKU. From NVIDIA's vantage point, this means there is a "large upgrade opportunity ahead of us." And to that end, NVIDIA is bringing generative AI to gaming with technologies like ACE for games, for example.

NVIDIA RTX 40 series laptops on a green and black background.

Interestingly, laptop GPU shipments are now outpacing desktop GPUs in several regions around the world, Kress said.

"This is likely to shift the reality of our overall gaming revenue a bit, with Q2 and Q3 as the stronger quarters of the year, reflecting the back-to-school and holiday build schedules for laptops," Kress added.

The totality of NVIDIA's monster revenue figures resulted in net income of $6.19 billion. That's up a staggering 203% sequential and a mind-boggling 843% year-over-year. Looking ahead, NVIDIA anticipates revenue of $16 billion, plus or minus 2%, during the third quarter of fiscal 2024.