The Six Five teams dives into the latest earnings report from NVIDIA.
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Transcript:
Patrick Moorhead: So let’s roll into another chip play here. NVIDIA had their earnings and my goodness, NVIDIA is just on a roll here.
Daniel Newman: Yeah. It’s hard to believe that just quarter after quarter, you’re just talking about record, after record, after record breaking result, Pat. On the top line, they beat a 50% growth. They well exceeded the growth that was expected by the 7.1 versus 6.8.
On the earning side, they came in just above another 60% growth, Pat. You had record results in multiple categories for the company. $3.2 billion in gaming. It had at an extremely strong data center result as well, $2.9 billion. That was 55% in the data center, 42% for the gaming. We’ve seen data center quickly catch up to that gaming category, but both have been extraordinarily strong. If I had to give one, only because it’s like all good, good, good with NVIDIA, probably the only thing that I saw that was a little bit of a pause for me was just that it automotive, like when we saw so much momentum coming out of Qualcomm. We mentioned that is that automotive it’s up 8% annual, let down 11% sequentially, but seemingly it stalled out. I mean, you’re talking about these businesses that have gone data center from a billion, almost 3 billion in the matter of four or five quarters. And of course you got the Mellanox acquisition in there, but NVIDIA, which was one of the original announced its newest Hyperion 8 DRIVE Platform, 2024 autonomous vehicles into the space, but yet down, or growing very slowly. You’re only talking about 135 million.
Now one of the big numbers of interest or big topics of interest that came out of earnings was a huge focal point for the companies, this Omniverse Platform that it’s building to be able to support the Metaverse. We talked a little bit about that with GTC, so I don’t want to spend a lot of time on it, but trying to better understand how the company’s going to be able to monetize this through being able to charge for things like its avatar services, things like being able to charge for its data replication, it’s simulation services. And he did go into that pretty extensively in the company’s Q&A, which is interesting. I did have a piece on MarketWatch on this and how exactly the company is going to likely monetize. And so we’ll put that in the show notes.
But overall Pat, there’s really not a lot that investors or people that are following NVIDIA can criticize about this company. It’s really just it’s growth, it’s growth, it’s growth and it’s been explosive. And the company was $200 a share after it’s split at the end of its last quarter and I believe it’s trading close to $350, just over one quarter later. So I mean that the terror that NVIDIA is on has been extraordinary. Credit to Jensen and his team. And they’re right on the front of all of these key trends, so you got to feel bullish for the long sentiment that despite headwinds, despite chip shortages, despite the fact that it has had so much growth in such a short period of time, more growth in its near future. It’s hard to imagine any other direction.
Patrick Moorhead: Yeah. I feel like the only, if you can call it a blemish would be auto and it just hasn’t moved that much, like you said. Qualcomm came in and took a lot of that dashboard share and let’s just be honest that the whole self-driving thing hasn’t taken like anybody thought it was, because NVIDIA certainly has enough design wins to fill up an entire page, but it just seemingly doesn’t appear as if it’s turning into big time revenue.
Something noticed that I thought was really interesting in the CFO notes was that there was almost a boiler plate disclosure that that said, hey, even though our CMP cards are focused on blockchain mining, GPU cards that aren’t limited can do this mining as well. And that to me got me thinking, okay, is the gaming market truly moving at this pace? And you can see from what I showed in that fourth quarter of ’20, it was a $1.5 billion business and Q3 of ’22, it’s a $3.2 billion business. Is that all gaming or is it a combination of crypto mining plus gaming?
So I feel like investors have bought into AI and essentially believing NVIDIA owns everything in the data center for a long time, buying into gaming and not believing that AMD is doing anything there. So writing a lot of checks and I don’t think it’s coming from NVIDIA actually writing those checks, I just think its massive investor expectation. And Daniel you nailed this. I think you wrote a MarketWatch article that talked about potentially a trillion dollar company here, so kudos to you.
Daniel Newman: Yeah. I wrote that about a year and a half, maybe about 15, 16 months ago. It was right upon the announcement of Arm, which is ironic as I thought that Arm deal was going to be fairly critical. And despite the fact Pat that the arm deal has somewhat stalled, recent additional probes that are going to come out of the UK were announced. You have a number of other hurdles for it to overcome. And the timeline, I mean, can you imagine Pat, if the NVIDIA deal to acquire Arm passes, I think the trillion dollar is a sure thing. Because it accelerated from under half a billion or half a trillion to almost 800, during a time when this has all been uncertain. So yeah, it’s a crazy set of circumstances, Pat. And congratulations, like I said, I mean on these results. All we can ask is how long can this continue? How long can a growth like this-
Patrick Moorhead: I know.
Daniel Newman: … continue? But we’ve said the same thing for AMD for a while too. We’re like, it’s got to slow down and it just hasn’t.
Patrick Moorhead: It’s funny though, it’s a different thing.
Daniel Newman: Totally is.
Patrick Moorhead: I mean, AMD has relatively small market share, NVIDIA has monster market share. That gaming number is not share shift with AMD. It’s taking advantage of market growth. In fact, AMD is gaining share in GPU, but there are probably 1% market share in the data center to NVIDIA’s 99% share in the data center. And that’s the biggest difference. And if I were to say on the gaming side, NVIDIA has a much higher share of what I call premium gaming cards, AMD has a higher mid-range and low end. It’s going to get interesting when Intel gets into this game to see what happens to all this growth. Heck it could even grow the market even further because a company like Intel can, even if it only offers 10% or 5% of what the market needs, that’s going to be an extra 5% to 10% that the market couldn’t hit because of all supply chain challenges.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
