Nvidia's huge run continues as its data center business surges

Matthew Lynley
Nvidia continues to ride the wave of a myriad of huge success stories for the company, like the rapid adoption of the Nintendo Switch and demand for technology to power AI computation, as it saw yet another quarter where its business continued to expand significantly.

Nvidia continues to ride the wave of a myriad of huge success stories for the company, like the rapid adoption of the Nintendo Switch and demand for technology to power AI computation within data centers, as it saw yet another quarter where its business continued to expand significantly.

It's a wave that's tripled Nvidia's stock in the last year. Nvidia's significant revenue growth dovetails with the massive demand for its GPU technology to power AI applications like autonomous driving. Those chips, unlike CPUs, are able to better handle the kinds of rapid-fire calculations for inference and machine training, making them perfect candidates to slot into devices like those that power computer vision or autonomous driving. It's an area that has the intense interest of even companies like Apple, which has designed its own GPU for its next-generation iPhones.

But it's also one that's become increasingly critical in data centers, as companies are looking to tap GPUs on-demand in order to power their various AI applications. That was especially true as the business generated nearly half a billion dollars this quarter alone. Around this time last year, Amazon rolled out a set of tools that allowed companies to tap the GPU power they needed as more and more startups want to build new businesses around computer vision and machine learning.

Here's a breakdown of the company's revenue, including the third quarter it reported today (in actual quarterly time, as Nvidia considers this its fiscal 2018):

Still, Nvidia is not invulnerable. It's exposed a massive business that continues to grow, and that's caught the eye of a myriad of companies — including Intel and AMD. Those two are working together on a chip for notebooks that combines an Intel CPU and an AMD GPU, which could potentially challenge Nvidia should it turn out to be successful at turning lightweight computers into formidable gaming machines. As seen in the chart above, the company's gaming division still accounts for a massive share of Nvidia's revenue. Nvidia clearly holds a massive leadership position and has a head start, however.

Unsurprisingly, we've seen a huge amount of growth in the company's demand for data center products in addition to it riding the wave of the Switch's success. Some of Nvidia's strongest growth came from its data center division, which the company breaks out — and nearly tripled year-over-year in the second quarter compared to the same quarter the year before. You can see the full breakdown of the company's revenue splits as well as the signficiant gains it's made in its data center business.

Nvidia, more than anyone, is probably the biggest benefactor to the sudden explosion of applications requiring GPUs for their computation instead of the standard GPU. In the past year, Nvidia's stock has almost tripled, and as applications like computer vision and autonomous driving require a different kind of processor Nvidia has not only seen demand for GPUs explode, but also found ways to position itself as the company for AI hardware.

Today still wasn't a huge one on Wall Street despite a healthy beat on the financial metrics (which we'll get to later). Nvidia's shares are only up around 2 percent following the report and have kind of shifted back and forth between a small dip and a small jump. That still doesn't dramatically impact Nvidia's huge run in the past year. Here's the chart:

Here's the final slash line for the company:

  • Q3 revenue: $2.64 billion, vs Wall Street estimates of $2.36 billion
  • Q3 earnings: $1.33 per share, vs Wall Street estimates of 94 cents per share
  • Q3 gaming revenue: $1.56 billion
  • Q3 data center revenue: $501 million
  • Q4 revenue forecast: $2.65 billion

We're updating this post as more information comes in.