Almost a trillion company: AI accelerators make Nvidia’s shares explode

Nvidia’s data center group posts record sales of $4.3 billion thanks to GPU accelerators for AI.

The hype surrounding artificial intelligence helps Nvidia to produce an unexpectedly good annual report: In the fiscal quarter from February to the end of April 2023, the company turned over 7.19 billion US dollars – 11 percent more than expected at the beginning of the year and 19 percent more than in the previous quarter.

The data center group, which primarily includes all GPU accelerators such as the H100 and A100, generated by far the largest chunk. These models are currently in particularly high demand among hyper scalers to train neural networks. Corporations such as Google, Microsoft, and Meta have already announced the construction of large supercomputers with Nvidia’s GPUs.

With a good 4.28 billion dollars, the data center group has turned over more money than ever before. The share of sales was almost 60 percent. While the gaming division was still Nvidia’s driving force until 2021, it has recently been left far behind with sales of $2.24 billion. Compared to the two previous quarters, however, there was an initial recovery – since then the first GeForce graphics cards of the RTX 4000 series have appeared and finally also become cheaper.

The professional visualization (formerly Quadro) and automotive groups were, as usual, in the low three-digit million range.

Nvidia’s revenue is broken down by division. Data Centers brought in by far the most money. (Image: Nvidia)

More net profit

Nvidia’s overall revenue fell 13 percent year-over-year. The fact that the net profit still rose by 26 percent to a good two billion dollars was due to the failed ARM takeover: In the event of failure, the takeover agreement provided for a clause that obliged Nvidia to pay 1.25 billion dollars.

Meanwhile, the lucrative business with the GPU accelerators is reflected in the gross margin of 64.6 percent and a high operating profit of $2.14 billion – 70 percent more than in the previous quarter.

Record quarter expected

In the current second quarter of the business year, Nvidia expects the highest turnover in the company’s history at 11 billion dollars – the previous record was almost 8.3 billion dollars exactly one year ago, driven by the crypto mining boom at the time. The expectation supports rumors that the company is switching production at chip order manufacturer TSMC to AI accelerators.

Nvidia’s shares are up 25 percent in after-hours trading. With this, Nvidia scratches a trillion market capitalization.


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