Data centre overtakes gaming at Nvidia

Business news | August 26, 2020

Nvidia saw revenues of $3.87bn in the second quarter of the year with record data centre revenues overtaking gaming for the first time

By Nick Flaherty

Data centre revenues have overtaken gaming for the first time at GPU designer Nvidia

The company saw a record revenue of $3.87 billion for the latest quarter, up 50 percent from a year earlier and 26 percent on the previous quarter. The Data Centre revenue of $1.75 billion was up 167 percent from a year earlier, overtaking gaming at $1.65bn, up 24 percent from the previous quarter and up 26 percent from a year earlier.

Interconnect specialist Mellanox recorded its first quarter as part of Nvidia, contributed 14 percent of revenue at $1.75bn.

“Our Ampere GPU architecture is sprinting out of the blocks, with the world’s top cloud service providers and server makers moving quickly to offer NVIDIA accelerated computing. Mellanox grew sharply, driven by the need for high-speed networking in cloud data centers to scale-out AI services. And Mercedes-Benz’s partnership with NVIDIA to power its next-generation fleet of luxury cars — from the computer to the AI software, and from the cloud to the car — is transformative,” said said Jensen Huang, founder and CEO of Nvidia.

Automotive saw a drop of 28 percent on the previous quarter to $111m, down 47 percent year-over-year partly as a result of the Covid-19 pandemic. “This was slightly better than our outlook of a 40 percent sequential decline as the impact of the pandemic was less pronounced than expected, with auto production volumes starting to recover after bottoming in April,” said Colette Kress, CFO of Nvidia.

“Some of the decline is also due to the roll-off of legacy infotainment revenue, which remained a headwind in future quarters. In June, we announced a landmark partnership with Mercedes-Benz, which starting in 2024 will launch software-defined intelligent vehicles across an entire fleet in using end-to-end Nvidia technology,” she said.

Next: AI in Mercedes

Mercedes will use Nvidia’s full technology stack, including the DRIVE AGX computer, DRIVE AV autonomous driving software and Nvidia’s AI infrastructure spanning from the core to the cloud. This will make it easier to integrate and upgrade advanced software features as they are developed.

“This is a transformative announcement for the automotive industry making the turning point of traditional vehicles becoming high-performance updatable data centres on wheels. It’s also a transformative announcement for NVIDIA’s evolving business model as the software content of our platforms grows positioning us to build a recurring revenue stream,” she said.

“Despite the pandemic’s impact on our professional visualization and automotive platforms, we are well positioned to grow, as gaming, AI, cloud computing and autonomous machines drive the next industrial revolution around the world,” said Huang.

This is a tipping point to software, he says.

“The accelerated computing model we pioneered has clearly passed the tipping point. We have transformed our company in three dimensions,” he said. “First, Nvidia is a full-stack computing platform company, offering the world’s most dynamic industries, the chips systems, software and libraries like Nvidia AI to tackle their most pressing challenges. Second, Nvidia is a data centre-scale company with capabilities to architect, build and operate the most advanced data centres. The data centre is the new computing unit. With this capability, we can create modern data centre architectures that are computer maker partners, and then scale out to the world’s industry.”

“Third, Nvidia is a software-defined company today, with rich software content like GeForce NOW, virtual workstation in the cloud, AI and Drive that will add recurring software revenue to our business model.” He added. “In the coming years, AI will revolutionize software. Robotics will automate machines, and the virtual and physical worlds will become increasingly integrated through VR and AR. Industry advancements will accelerate, and NVIDIA-accelerated computing will play an important role.”

Nvidia expects a bounce back with revenue of $4.40bn in the third quarter.

www.nvidia.com