Nvidia Reports Record Revenue Driven by Generative AI
Yesterday, Nvidia announced a remarkable $22.1 billion in revenue for its fourth fiscal quarter of 2024 (ending January 31, 2024), surpassing Wall Street’s expectations. This represents a staggering 265% increase compared to the previous year, fueled by the rapid growth of generative AI.
Reflecting on Nvidia's origins, it’s impressive to see how a company founded by three engineers in a San Jose Denny’s in 1993 has evolved into a tech powerhouse. Today, Nvidia's market value exceeds $1.667 trillion, placing it among the top five technology companies alongside Microsoft, Apple, Amazon, and Google.
I recently spoke with Jensen Huang, CEO of Nvidia, after the earnings report. During our short five-minute interview and the earnings call, Huang shared insights on the industry trends propelling Nvidia’s growth.
“There’s no reason to upgrade to more CPUs when you can fundamentally enhance throughput using GPUs,” Huang explained. He emphasized that GPUs can accelerate computing, improve energy efficiency, and significantly reduce costs.
“That speed has initiated a second industry-wide transition known as generative AI,” Huang noted. “Generative AI represents a new application and a revolutionary approach to software development that cannot operate on traditional, general-purpose computing. Acceleration is essential.”
Huang highlighted the concept of “sovereign AI,” where countries safeguard user data, with large language models contained within national or corporate borders for enhanced security.
“We are witnessing the emergence of a new type of data center, akin to an AI generation factory,” Huang described. “This infrastructure takes raw data and transforms it with Nvidia's AI supercomputers, creating invaluable tokens that power experiences on platforms like Midjourney.”
We covered a range of topics, including sovereign AI, recent layoffs in the gaming industry, Nvidia's collaboration with Intel Foundry, and opportunities in the Chinese market. Here’s an edited transcript of our conversation.
Q: What is the necessity for territorial AI data centers?
Huang: That’s a good question. The raw material for generative AI is data, and people increasingly recognize that this data is theirs. Allowing external entities to scrape the internet for personal data is becoming untenable. Much data is still confined to national libraries, and as countries realize the value of protecting their own data for generating AI, we can expect significant infrastructure development on a global scale.
Q: AI is thriving, while the gaming sector struggles. What are your thoughts on this contrast?
Huang: Our gaming business grew nearly 20%, indicating a strong foundation despite industry challenges. Revitalizing gaming through AI integration is crucial. We’ve introduced innovations like ACE, our Avatar Cloud Engine. By combining smaller language models with digital avatars, we aim to create more engaging characters that interact with players dynamically. AI will streamline the animation process, leading to lower production costs and enhanced content quality in the coming years.
Q: With the recent developments in Intel’s foundry business, are you considering collaboration?
Huang: We’re open-minded and continuously evaluate our options. Currently, we work with TSMC and Samsung, whose advanced, agile, and cost-effective processes we greatly value. We remain receptive to collaboration but maintain robust relationships with our existing partners.
Q: How is Nvidia navigating the complexities of the Chinese market amidst U.S. regulations?
Huang: We align with U.S. government objectives to restrict advanced technology access to China while striving for global success. Generative AI demand in China matches that of other regions, and we are committed to complying with regulations while continuing to provide innovative products to meet this demand.
This conversation showcases Nvidia’s strong position in the tech landscape and its forward-looking strategies in the rapidly evolving realm of AI.
Ranking
