Much of Nvidia’s growth this quarter was driven by data center revenue, which was $30.8 billion in the quarter, up 112 percent from a year ago. The company’s gross profit margin was 74.5%, essentially unchanged from last year. But analysts expect Nvidia’s margins could shrink as the company starts producing more Blackwell chips, which will cost more to produce than their less advanced predecessors.
Nvidia’s earnings reports are seen as an crucial driver of the AI industry. Chip architect’s advanced GPUs that support intricate neural network processing have enabled the current boom in generative AI. As Silicon Valley giants raced to build novel chatbots and image-generating tools over the past few years, Nvidia’s revenues have exploded, allowing it to overtake Apple as the world’s most valuable public company. Since the launch of ChatGPT in November 2022, Nvidia’s stock price has increased almost tenfold.
Almost every major tech company working on AI, even these building our own processing unitsthey rely heavily on Nvidia GPUs to train their AI models. Meta, for example, said it is building its latest AI technology on a cluster above 100,000 Nvidia H100. Meanwhile, smaller AI startups were left without sufficient AI computing power as Nvidia struggled to keep up with demand.
Blackwell, Nvidia’s newest GPU, consists of two pieces of silicon, each the same size as the previous chip, Hopper, combined into a single element. This project produced a chip that is claimed to be four times faster and has more than twice the number of transistors than its predecessor.
But Blackwell’s launch did not go smoothly. The novel chip was originally scheduled for delivery in the second quarter, but it encountered production problems, apparently with a delay implementation by several months. Huang took responsibility for the problem, calling it: “design defect” which “resulted in low yield.” In August, Huang told Reuters that Nvidia’s longtime chipmaking partner, Taiwan Semiconductor Manufacturing Company Narrow, helped Nvidia resolve the problem.
Moorhead told WIRED that he remains bullish on Nvidia and is confident that the generative AI market will continue to grow for at least the next 12 to 18 months, despite some latest reports suggesting that AI progress is starting to plateau.
“I think a shareholder revolt would only be possible if they were concerned about the capital expenditure or profitability of hyperscale companies,” Moorhead said, referring to vast tech companies like Amazon, Google, Microsoft and Meta that are investing heavily in AI cloud services . “But I think they’ll just keep buying out Nvidia until that day comes.” He added that enterprise artificial intelligence is still an area of development for Nvidia as well.
On today’s earnings call, Nvidia CFO Colette Kress said Nvidia’s enterprise AI tools are “full steam ahead,” including an operating platform that allows other companies to create their own AI co-pilots and agents. Customers include Salesforce, SAP and ServiceNow, she said.
Huang repeated the same later in the conversation: “We’re starting to see enterprises adopting agent-based AI,” he said. “It really is the latest rage.”