Much of Nvidia’s growth this quarter was driven by data center revenue, which totaled $30.8 billion for the quarter, up 112% from last year. The company’s gross profit margin was 74.5 percent, essentially flat from a year ago. But analysts expect Nvidia’s margins could shrink as the company shifts to making more Blackwell chips, which cost more to make than their less advanced predecessors.
Nvidia’s earnings reports are considered an important example for the AI industry. Advanced on-chip GPUs powering the processing of complex neural networks is what has made the current boom in generative AI possible. While the Silicon Valley giants have raced to create new chatbots and imaging tools over the past few years, Nvidia’s revenue has exploded, allowing it to surpass Apple as the world’s most valuable public company. Since the launch of ChatGPT in November 2022. Nvidia’s stock price has increased almost tenfold.
Almost every major tech company working on AI, even those that build their own processors, rely heavily on Nvidia GPUs to train their AI models. Meta, for example, said it is building its latest AI technology on a cluster of more than 100,000 Nvidia H100s. Meanwhile, smaller AI startups were left without enough AI computing power as Nvidia struggled to keep up with demand.
Blackwell, Nvidia’s latest GPU, consists of two pieces of silicon, each equivalent in size to its predecessor chip, the Hopper, which are combined together into a single component. This design resulted in a chip that is supposed to be four times faster and with more than twice as many transistors as its predecessor.
But Blackwell’s launch was not smooth sailing. Originally scheduled to ship in the second quarter, the new chip ran into a manufacturing issue, reportedly delaying the launch by several months. Huang took responsibility for the problem, calling it a “design flaw” that “caused the low yield.” Huang told Reuters in August that Nvidia’s longtime chipmaking partner, Taiwan Semiconductor Manufacturing Company Limited, had helped Nvidia fix the problem.
“I think the only way shareholders are going to revolt is if they’re concerned about the capital costs or the profitability of the hyperscalers,” Moorhead said, referring to big tech companies like Amazon, Google, Microsoft and Meta that are heavily invested in AI cloud services. “But I think they’re just going to keep buying Nvidia until that day actually comes.” Enterprise AI is still a growth area for Nvidia as well, he added.
During today’s earnings call, Nvidia Chief Financial Officer Colette Kress said that Nvidia’s enterprise AI tools are “in full swing,” including an operating platform that allows other businesses to build their own copilots and AI agents. Customers include Salesforce, SAP and ServiceNow, she said.
Huang echoed the same point later in the call: “We’re starting to see enterprise adoption of agent AI,” he said. “It really is the latest rage.”
