While OpenAI top leadership dealt with its boardroom drama, it was business as usual for the rest of the team. The servers kept buzzing with requests from millions of users and developers, and the team even shipped a new update for ChatGPT, making the voice-feature available to all. In other words, more servers and a whole lot of love from NVIDIA. 

“ChatGPT, Microsoft 365 Copilot, CoAssit… are (all) built and run on NVIDIA,” said Colette Kress, chief financial officer at NVIDIA, at a recent earnings call (FY24 Q3). He said that NVIDIA HGX with InfiniBand are essentially the reference architecture for AI supercomputers and data centre infrastructures.

The result: No surprise, NVIDIA had another record-breaking quarter. Its revenue surged astronomically, reaching $18.1 billion, a 206% increase driven by substantial gains in data centre. 

NVIDIA’s data centre compute revenue quadrupled from last year and networking revenue nearly tripled. 

A glimpse into NVIDIA’s record-breaking earnings 

In FY24 Q3, NVIDIA’s data centre division achieved remarkable success, setting a sales record at $14.51 billion—a remarkable 279% YoY increase and a robust 41% sequential growth. The surge was fuelled by global demand for recommendation engines, generative AI applications, and large-scale language model training, driving the adoption of the NVIDIA HGX platform. 

Half of this revenue came from cloud infrastructure providers like Amazon, while the rest originated from consumer internet entities and large corporations. 

NVIDIA reported a net income of $9.2 billion with a diluted EPS of $3.71 per share, marking a remarkable 1,274% increase compared to the same period last year. Since May, NVIDIA’s ambitious forecasts have propelled its market valuation beyond $1 trillion, underscoring its unrivalled financial gains in the race for AI opportunities. 

Despite a decline in sales of Ampere GPU architecture-based data center products, the innovative Hopper GPU architecture-based HGX platform gained substantial traction, particularly among cloud service providers (CSPs), consumer internet firms, and corporations.

Consequently, NVIDIA anticipates sales of approximately $20 billion for the current quarter, surpassing analysts’ average estimates of just under $18 billion.

NVIDIA’s gaming revenue also surged impressively, with a 15% sequential rise and a substantial 81% YoY gain, driven by a heightened demand for the GeForce RTX 40 Series GPUs during the holiday season and back-to-school sales. Professional visualization revenue also soared, marking a 10% sequential increase and an outstanding 108% YoY growth. 

The boost was attributed to increased demand for corporate workstations and the successful introduction of laptop workstations utilizing the Ada Lovelace GPU architecture. NVIDIA’s stock also had to face a decline despite robust sales due to business losses in China, a consequence of recent US trade restrictions on advanced semiconductor technology. 

Low Expectations from China 

“Our sales to China and other affected destinations derived from products that are now subject to licensing requirements have consistently contributed approximately 20% to 25% of data center revenue over the past few quarters,” said Kress, adding that their sales to these destinations are expected to decline significantly in the fourth quarter. 

Despite potential challenges from new US export restrictions on China, NVIDIA remains resilient, expecting increased demand from other global markets to counterbalance any impact in the upcoming quarter. This underscores NVIDIA’s adaptability and strategic agility in navigating complex market conditions.

NVIDIA also anticipates positive contributions from other income and expenses by connecting with new projects and developments and aims to project an income of approximately $200 million, excluding non-affiliated investment gains and losses. The company targets a 15.0% tax rate with a margin of plus or minus 1%, excluding discrete items. 

Overall, NVIDIA eagerly anticipates a robust performance in the upcoming fiscal year’s fourth quarter, projecting revenue of $20.00 billion with a slight margin of variability of 2%. 

“Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI. The first movers are large language model startups, consumer internet companies, and global cloud service providers. The next waves are starting to build,” said NVIDIA chief Jensen Huang.