The newest Nvidia earnings report is out and it exhibits the corporate is continuous to turn into much less of a graphics card maker. and extra of a maker of chips for information facilities, not less than with regards to general income. Income from gaming now makes up only one sixth (12%) of the corporate’s whole earnings, down from 28% the earlier 12 months.
Because the maker of the only greatest graphics card on the earth, and loads of different high tier GPUs too – such because the not too long ago launched RTX 4070 Tremendous, the gaming GPU trade has lengthy relied on Nvidia to drive it ahead. Nevertheless, the sheer sum of money it’s incomes from different areas has the potential to push the corporate away from specializing in producing the graphics playing cards all of us use for gaming.
Trying in additional element, the fourth quarter monetary 12 months report (This autumn FY 2024) exhibits the corporate earned $24B within the final three months however solely $2.8B of that got here from its gaming division. For a similar interval final 12 months, the corporate earned simply $1.9B from gaming – in order that’s nonetheless a stable 56% enhance – however it pales compared to the 409% enhance in information middle income, which rose from simply $3.62B to $18.4B.
A lot of that information middle enhance relies on AI chips equivalent to the Nvidia H100. At a price of round $30,000 a bit, these monster AI-processing GPUs (sure, they’re successfully nonetheless GPUs) home 14,592 CUDA cores, 80GB of HBM3 capability, and use a colossal 5,120-bit reminiscence bus. And in the event you assume that sky-high value is all simply Nvidia gouging cash out of enterprise prospects… properly, there’s actually a revenue margin there, however estimates of the uncooked price of producing these chips, by analyst Raymond James, places them at costing Nvidia round $3,320 every.
So does this all imply Nvidia is more likely to abandon the gaming GPU market? No. Incomes $2.8B in three months continues to be an enormous sum of money that can preserve the corporate motivated to proceed churning out the likes of its upcoming RTX 5000 GPUs, and different gaming GPUs within the generations past.
What it maybe does imply is that the corporate received’t have to battle to achieve new prospects by reducing costs. Together with Nvidia nonetheless incomes lots from its current gaming division, it nonetheless instructions are domineering place when it comes to graphics card market share, with the newest Steam {hardware} survey exhibiting the corporate nonetheless has a 74% share of the market, in comparison with simply 16% for AMD.
Nonetheless, with GPU costs having broadly dropped in current weeks, the market is in a greater place than it has been for a few years, with the likes of the RTX 4070, RX 7600, and RTX 4080 Tremendous all providing surprisingly good worth for his or her segments.
