Nvidia earnings triple as AI revenues explode

Let’s face it, Nvidia isn’t a gaming company anymore. AI has taken over

Nvidia has published their earnings for Q3 FY24, and they are incredible. When compared to last year, revenue is up 206%. On top of that, Nvidia’s margins have increased to 74%, an increase of 20.4 percentage points. Not only are Nvidia selling more product, they are also generating larger profits from those sales. Why, the AI market has exploded, and Nvidia are one of the primary beneficiaries of this trend.

Nvidia’s data center earnings have increased to $14,514 million, increasing by almost 50% when compared to last quarter. When compared with last year, Nvidia’s datacenter earnings have increased by almost 3.8x, acting as the company’s largest growth driver. This growth comes from the growth of generative AI, a strong point for Nvidia’s datacenter products.

Nvidia’s gaming business has grown this quarter. The segment generated almost 400 million in additional revenue when compared with last quarter. That said, Nvidia’s 2.856 billion in gaming revenue is nothing when compared to the $14.514 billion that Nvidia has earned primarily from AI. Nvidia’s gaming revenue has not surpassed datacenter revenue since Q4 FY22. Now gaming revenue isn’t even close to datacenter revenues.

(Nvidia Earning breakdown (in Millions))

Nvidia is an AI company now

With Nvidia’s datacenter revenues now being over five times larger than their gaming revenues, I think it is safe to say that Nvidia is no longer a gaming company. Gaming is not Nvidia’s primary earner anymore, and currently it is unclear how this shift will impact the gaming market in the future.

We have already seen Nvidia push AI into the gaming-oriented products with their DLSS technologies. Ordinally, Nvidia gave us DLSS Super Resolution. Now, we have DLSS Frame Generation, and DLSS Ray Reconstruction to add to that list. Moving forward, we can expect Nvidia to continue adding to this suite of AI features.

With gaming earnings in the billions, we should not expect Nvidia to abandon the gaming market anytime soon. Money is money, and datacenter and gaming GPUs have a lot of similarities. That said, AI is clearly Nvidia’s focus now, and the company’s strong earnings are proof that this was the right move for the company.

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