Nvidia earnings could reveal its fastest-growing business isn’t chips: Chart of the Day

Wall Street is focused on Nvidia’s (NVDA) graphics processing units (GPUs). The faster-growing story is sitting beside them.

Nvidia has quietly built a networking operation that generated nearly $15 billion last quarter, up from roughly $3 billion per quarter two years ago. Wall Street expects that figure to approach $17 billion when the company reports earnings on Wednesday.

Compute still dwarfs networking inside Nvidia’s Data Center business. But networking has been growing faster, up nearly 200% year over year in the last quarter compared with 77% for compute.

That pace is slowing. Analysts expect networking growth of roughly 134% in the quarter about to be reported, still ahead of compute at about 100%.

The change goes straight to one of the biggest questions hanging over Nvidia.

Everyone is designing AI chips these days. Alphabet (GOOG, GOOGL), Amazon (AMZN), Microsoft (MSFT), Meta Platforms (META), and other hyperscalers are spending billions developing or commissioning custom processors that can handle some workloads without an Nvidia GPU.

But those chips still have to talk to one another.

As AI data centers connect thousands of accelerators into giant computing systems, moving data among those processors becomes a challenge in its own right. That has pushed the AI trade deeper into networking, memory, storage, and other infrastructure.