NVIDIA’s impressive growth is driven by its data center business, which saw a 427% increase in the latest quarter due to the demand for its AI processors. The company is assuring investors that clients investing in their chips will also see profitable returns from AI applications. This indicates that the AI industry has room for further expansion beyond its early stages as companies embark on larger and long-term projects.
NVIDIA’s major customers for its graphics processing units are large cloud providers like Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle Cloud, which contributed to half of the company’s $22.56 billion data center sales in the April quarter. Additionally, there are emerging GPU Data Center Startups, such as CoreWeave, that rent out Nvidia GPUs to customers for AI development.
After reporting better-than-expected earnings, Nvidia’s CFO Colette Kress highlighted the strong returns on investment that cloud providers are experiencing. She mentioned that for every dollar spent on Nvidia hardware, cloud providers can generate $5 in rental revenue over four years. The newer hardware offerings like the HDX H200 product promise even greater returns, with an example of generating $7 in revenue for every dollar spent on the servers.
Nvidia CEO Jensen Huang revealed that there is high demand for GPUs from cloud service providers and various AI startups like OpenAI, Google, and Anthropic, signaling a growing need for AI computing power. Meta intends to invest billions in Nvidia chips for its AI infrastructure, showing the importance of GPUs in powering AI applications. Nvidia is set to release its next-generation GPU, Blackwell, in data centers in the fiscal fourth quarter, easing concerns of a slowdown in technology advancements.
The first customers for the new chips include tech giants like Amazon, Google, Meta, Microsoft, and Tesla, along with prominent AI figure Elon Musk. Following the earnings announcement, Nvidia’s shares surged by 6% in extended trading, surpassing $1,000 for the first time. In addition to its financial performance, Nvidia also revealed a 10-for-1 stock split in response to the company’s significant growth over the past five years.
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https://www.cnbc.com/2024/05/22/nvidia-no-sign-of-ai-slowdown-after-over-400percent-jump-in-data-center-unit.html