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Nvidia triples Q3 sales, confirms chip leadership

Nvidia triples Q3 sales, confirms chip leadership

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By Peter Clarke

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GPU-for-AI chip vendor Nvidia Corp. has reported a massive increase in sales in its financial results for the third quarter ended October 29, 2023, confirming its position as the top chip company in the world.

Nvidia’s net sales were US$18.12 billion in the Q3 financial year 2024 compared with US$5.93 billion in the same quarter a year before. This tripling of sales happened despite the tightening of restrictions on exports to China during the quarter.

At the same time net profits were almost 50 percent of revenue. Nvidia reported a net profit of US$9.24 billion on the US$18.12 billion sales. This compared with the more conventional profit rate of about 10 percent a year before when Nvidia made US$680 million on revenue of US$5.93 billion.

Nvidia’s results eclipse those of long-term global chip market leader Intel. For Q3 ended September 30, Intel reported a net profit of US$300 million on revenue of US$14.2 billion. The revenue was down 8 percent on the same quarter a year before.

Generative AI taking off

Nvidia’s exceptional results were driven by sales into the data center, which grew to 80 percent of revenue at US$14.51 billion, nearly quadrupling on a year before – up 279 percent.

“Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and CEO of Nvidia in a statement.

“Large language model startups, consumer internet companies and global cloud service providers were the first movers, and the next waves are starting to build. Nations and regional CSPs are investing in AI clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries.

“Nvidia GPUs, CPUs, networking, AI foundry services and Nvidia AI enterprise software are all growth engines in full throttle. The era of generative AI is taking off,” he said.

China sales will dip

On October 17, 2023, the U.S. government announced updated licensing requirements for exports to China, Saudi Arabia, the United Arab Emirates, and Vietnam, of Nvidia AI processors exceeding certain performance thresholds, including the A100, A800, H100, H800, L4, L40, L40S and RTX 4090.

Nvidia said it is working with the US government to provide lower performance AI solutions under the new export regime. “We are working to expand our data center product portfolio to offer compliant solutions,” said Colette Kress, Nvidia CFO, on an earnings call. “We are working with some customers in China and the Middle East to pursue licenses from the U.S. government,” she added. Kress said it was too early to know if licenses would be granted for a significant amount of revenue.

Nvidia said that sales to China have contributed 20 to 25 percent of data center revenue over the past several quarters.

Nvidia said these US government licensing requirements for sales to China and elsewhere did not impact revenue significantly in Q3 of fiscal 2024. “We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions,” Nvidia said.

The company said it expects sales in the fourth quarter of fiscal 2024 to be $20.00 billion, plus or minus 2 percent. If Nvidia achieves that, its annual revenue will hit US$58.8 billion in fiscal 2024, compared with US$27.0 billion in fiscal 2023. Meanwhile Intel is expected to fall back from sales of US$63.1 billion in calendar 2022 to US$53.9 billion in calendar 2023.

Related links and articles:

www.nvidia.com

www.intel.com

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