Demand for generative AI has translated into skyrocketing financial growth for Nvidia, even as sales for PC graphics cards has slowed.
The demand has been so huge that during the fiscal Q2 Nvidia posted a 101% year-over-year increase in revenue to reach $13.5 billion. That exceeds the company’s own $11 billion projection for the quarter by a wide margin.
The soaring revenue came from data center GPU sales, which includes chips capable of powering generative AI programs, such as ChatGPT. Nvidia’s data center sales reached a record $10.3 billion in the quarter, a 171% increase from the year before.
The company is also selling the AI chips at huge margins for lucrative profits. Nvidia’s net income was up a whopping 843% year-over-year at $6.1 billion.
“The race is on to adopt generative AI,” Nvidia CEO Jensen Huang said in the earnings report, which notes that companies worldwide are transitioning to generative AI. As a result, the growth isn’t expected to stop. The company projects it’ll rake in another $16 billion in revenue during fiscal Q3, which would represent a 165% increase from the previous year.
Meanwhile, Nvidia says its supply for data center GPUs is expected to increase each quarter through next year. However, the company warns that if the US enacts stronger regulations to block Nvidia GPU sales to China, then its growth could be harmed.
As for gaming, Nvidia only saw modest growth in fiscal Q2. The company’s gaming GPU sales were merely “up 11% from the previous quarter and up 22% from a year ago,” reaching $2.49 billion. This comes as Nvidia already saw a slowdown in GPU sales amid waning demand and user complaints about the current RTX 4000 generation, which have been pricey.
The company has also been experiencing an oversupply situation for graphics cards. But on Wednesday, Nvidia CFO Colette Kress said that graphics card inventory levels at retailers have been normalizing, which helped the company post growth in gaming GPU sales.
